Economic Selection of the Mean and Upper Limit for a Canning Problem with Limited Capacity

Abstract

We consider the economic selection of both the process mean and the upper control limit in a two-level process-control scheme for a capacitated (bottleneck) production process. A closed-form expression for the optimal upper control limit is developed, and a one-way table and an approximating equation are provided for the optimal mean. The paper quantifies the savings in expected profit relative to using a single level of process control, and identifies the economic conditions under which the second level of process control is most beneficial.