Acceptance sampling and reliability: The tradeoff between component quality and redundancy

This paper examines tradeoffs between two means of improving system reliability. These are: (1) increasing component reliability through more stringent acceptance sampling, and (2) improving system reliability through increases in component redundancy. The paper also demonstrates methods for generating probability distributions on system reliability. This is done by specifying a prior distribution on the number of defects in a lot, revising this distribution based on information in the acceptance sample, then transforming the posterior distribution on the number of defects into a distribution on reliability for a given system. Finally, the paper demonstrates the use of stochastic dominance decision criteria to analyze the tradeoffs between redundancy and component reliability. All computational work for this paper was done using EXCEL 4.0.