Economic design of the specification region for multiple quality characteristics

Abstract

Economic specification limits have typically been developed on the basis of a single quality characteristic. From the viewpoint of the customer, products are often evaluated based on multiple quality characteristics. The specification region for multiple quality characteristics must be determined on an economic basis where we minimize the total loss to both the producer and the customer and thus to the whole society. In this paper a multivariate normal distribution is considered for the quality characteristics. The specification region is given by truncating the multivariate normal distribution. We present the optimization model to develop the specification region for multiple quality characteristics based on the framework of multivariate quality loss function.