In this paper, we develop a quality improvement model based on the structure of classical economic production quantity (EPQ) model. The asymmetrical truncated loss function is used to evaluate the cost of poor quality in a production system. A practical quality improvement case which follows the 6-sigma DMAIC method in a car seat assembly line is discussed to verify the proposed model. Our model provides a fundamental structure for studying the cost of quality improvement in a production system. Based on this model, the management can evaluate the affect of quality investment to generate significant financial return in their production line.
- Asymmetrical truncated loss function
- Economics of production