Joint optimization of process target mean and tolerance limits with measurement errors under multi-decision alternatives

Determining the optimal target mean for a process has been identified as an important research area and a number of models have been proposed in the literature. This paper differs from previous studies of this problem in two ways. First, most previous studies address the process target problem through models seeking the optimal process mean using fixed tolerance settings of a process. Second, in real-world industrial settings, there are several markets often available with different price/cost structures. In this paper, we develop a model for jointly determining both the optimal process target mean and the optimal tolerance limits under the situation where there are several markets available with different price/cost structures. We then investigate the effects of measurement errors on the optimum process target and tolerance limits with multi-decision alternatives. A numerical example is given, and sensitivity analyses are also performed to study the effects of measurement errors on this model.