An economic two‐stage screening procedure with a prescribed outgoing quality in logistic and normal models

Do Sun Bai, Hyuck Moo Kwon and Min Koo Lee

Naval Research Logistics (NRL), 1995, vol. 42, issue 7, 1081-1097

Abstract: An economic two‐stage screening procedure based on a dichotomous performance variable T and a continuous screening variable X is proposed. X is measured first to decide whether an item should be accepted, rejected, or additional observations should be taken. If no terminal decision is reached, T is then observed to classify the undecided items. Two models are considered; (i) the logistic model, where P(T = 1|X = x) is assumed to be a logistic function of x, and (ii) the normal model, where X given T is assumed to be normally distributed. A simple economic model based on inspection and misclassification costs is constructed. Optimal cutoff values on the screening variable are obtained by minimizing the expected cost subject to the constraint that the average outgoing quality attains a pre‐specified level. Solutions are provided for both known‐parameter and unknown‐parameter cases. © 1995 John Wiley & Sons, Inc.

Date: 1995
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https://doi.org/10.1002/1520-6750(199510)42:73.0.CO;2-X

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