Joint determination of the optimum process mean and screening limits for multiple market structures

Most models reported in the literature treat the determination of process mean and screening limits as two separate research fields. In this paper, the problem of jointly determining the optimum process mean and screening limits for each market is considered in situations where there are several markets with different price/cost structures. Two inspection procedures are considered; an inspection based on the quality characteristic of interest, and an inspection based on a surrogate variable which is highly correlated with the quality characteristic. A Taguchi's quadratic loss function is utilized for developing the economic model for determining the optimum process mean and screening limits. A numerical example is given.