Production control in a kanban-like system with defective outputs

The authors analyze a simple model of a production system, controlled using a variant of the kanban system, where each stage may produce defective items. They use the model to compare alternative product-test sites and to explore in detail the benefits of improving production quality. The authors find, for example, that inspecting close to the source of production has clearly measurable economic benefits, and that quality-improvement efforts should be focused first on downstream stages.