Abstract
We consider the economic selection of both the process mean and the upper control limit in a two-level process-control scheme for a capacitated (bottleneck) production process. A closed-form expression for the optimal upper control limit is developed, and a one-way table and an approximating equation are provided for the optimal mean. The paper quantifies the savings in expected profit relative to using a single level of process control, and identifies the economic conditions under which the second level of process control is most beneficial.
Additional information
Notes on contributors
Robert L. Schmidt
Dr. Schmidt is an Assistant Professor of Operations and Management Science.
Phillip E. Pfeifer
Dr. Pfeifer is a Professor of Business Administration.