Varying three parameters of the Hotelling's T2 control chart, namely, the sample size, the sampling interval length, and the action limit, results in a great improvement over the traditional T2 control chart particularly for the small process shift. This paper presents the economic model for designing the variable parameters T2 chart. In the economic design, a cost function is constructed, involving the cost of sampling and testing, the cost of false alarm, the cost to detect and remove the assignable cause, and the cost when the process is operating out-of-control. Also, a heuristic method of finding optimal values of adaptive design parameters for minimizing the cost function is presented. Variable and fixed parameters T2 control charts are compared with respect to the expected loss per unit time. Furthermore, the effects of the initial sample number (used for estimating the parameters of F-distribution) upon the operating cost and adaptive design parameters are examined.
