A serial production process consists of consecutive stages through which items being manufactured must pass in order to become finished products. At the termination of each production stage, all the items are inspected prior to being processed in the next stage. The items that do not conform to predetermined screening specifications are scrapped. The decision of whether to pass an item to the next stage should be based on the item's current quality, the production conditions and costs in later stages, and the cost of rejection at the current stage. The information available on the current quality depends on the inspection method and information processing structure used by the producer. Two cases are considered in this paper. In the first case, acceptance inspection is used; consequently, the exact values of the characteristics are not available. In the second case, variable inspection is used, and the exact values of the quality characteristics are measured and maintained during the course of production. Multi-stage models are formulated for these cases. A simulation study indicates that the two multi-stage models have little cost difference but have a significant economical advantage over the approach which treats inspection stage independently.
European Journal of Operational Research, 52(3), 280-290