Abstract
We present an approach for deriving indifference functions for use in implementing price-adjusted acceptance sampling plans. The key element underlying the application of PASS (Price Adjusted Single Sampling) methodology is an economic model of the ordering process that specifies the costs and benefits as functions of the amount of acceptable material received. The basic idea in deriving an indifference function is to adjust the price of the lot to compensate for departures from the planned amount of acceptable material received. Two simple scenarios are analyzed to illustrate the application of trie approach.
Notes
Handled by the Applied Probability/Stochastic Processes Department