Article ID: | iaor20162698 |
Volume: | 67 |
Issue: | 7 |
Start Page Number: | 982 |
End Page Number: | 988 |
Publication Date: | Jul 2016 |
Journal: | Journal of the Operational Research Society |
Authors: | Abdulmalek Fawaz, Darwish Mohammed A |
Keywords: | production |
In the traditional lot sentencing rule, a buyer arrives to one of two decisions regarding lot disposition; either accept or reject a lot. However, it is more appropriate to consider choices between those two extreme decisions. A clear case where the traditional lot sentencing rule is not flexible is when a buyer purchases a lot from an English auction. In this paper, we propose a model that helps a buyer in estimating the value of a production lot. This model can be used by a bidder before the bidding process starts to estimate the value of an auctioned lot. The model provides an action plan that includes the estimated acquisition cost as a function of the number of defective items found in a random sample. Unlike the traditional lot sentencing rule, the proposed rule is more flexible and provides buyers with wider range of possible actions.