Control charts: a cost‐optimization approach for processes with random shifts

András Zempléni, Miklós Véber, Belmiro Duarte and Pedro Saraiva

Applied Stochastic Models in Business and Industry, 2004, vol. 20, issue 3, 185-200

Abstract: In this paper we describe an approach for establishing control limits and sampling times which derives from economic performance criteria and a model for random shifts. The total cost related to both production and control is calculated, based on cost estimates for false alarms, for not identifying a true out of control situation, and for obtaining a data record through sampling. We describe the complete process for applying the method and compare with conventional procedures to real data from a Portuguese pulp and paper industrial plant. It turns out that substantial cost‐reductions may be obtained. Copyright © 2004 John Wiley & Sons, Ltd.

Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:wly:apsmbi:v:20:y:2004:i:3:p:185-200

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