Sequential inspection in a two-stage system

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)22_Publication in policy or professional journal

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Original languageEnglish
Pages (from-to)4068-4073
Journal / PublicationProceedings of the IEEE Conference on Decision and Control
Publication statusPublished - 1997
Externally publishedYes


Title36th IEEE Conference on Decision and Control (1997 IEEE CDC)
LocationHyatt Regency San Diego
PlaceUnited States
CitySan Diego
Period10 - 12 December 1997


We study a quality control problem in a two-stage tandem system. We assume that at each stage units are processed in batches, and the defect rates are random variables with known distributions. Final products are supplied to customers under warranties or service contracts, with penalty costs associated. Our focus is on coordinating the inspection procedures at the two stages. Using a stochastic dynamic programming formulation, we show that the optimal policy at stage 1 is characterized by a sequence of thresholds, and at stage 2, by a priority structure, as well as a threshold structure. The key to optimality is a so-called K-submodularity property, which is a strengthening of the usual notion of submodularity.