A break-even quality level approach to location of inspection stations in a multi-stage production process

SUMMARY

The break-even quality level concept for a multi-stage production process is introduced and a general model for calculating break-even quality levels between pairs of potential inspection stations, compatible with various formulations of this problem, is developed. The concept itself is intended to contribute to a better understanding of the optimal policy nature. An algorithm, based on this approach and providing an optimal location procedure for perfect inspection, is tested using data examples of imperfect inspection models appearing in literature and optimal solutions are obtained.