Article ID: | iaor20084199 |
Country: | Netherlands |
Volume: | 172 |
Issue: | 1 |
Start Page Number: | 127 |
End Page Number: | 145 |
Publication Date: | Jul 2006 |
Journal: | European Journal of Operational Research |
Authors: | Lam Yeh, Li Kim-Hung, Wong Heung, Ip Wai-Cheung |
Keywords: | markov processes |
In this paper, a sequential variable sampling plan is studied. Suppose that the quality of an item in a batch is measured by a normally distributed random variable with a known variance, but the mean is unknown with a normal prior distribution. Then by using Bayesian approach and considering a Markov decision process, the optimality equations for the minimum total expected cost are formulated. We show that an optimal decision rule will have a control limit structure. An algorithm for a sequence of ε-optimal decisions is introduced. Then, the statistical procedure for conducting the sequential sampling plan is presented.