Optimal process control policies under a time-varying cost structure

Kwei Tang, Linguo Gong, Dong Shang Chang

Research output: Contribution to journalArticlepeer-review


Quality experts have recognized two types of quality costs resulting from failure of control; namely, internal and external failure costs of control. Explicitly considering the difference between internal and external failure costs in designing statistical process control procedures is especially important in today's business environment because (1) inventory holding time is strategically kept very short because of the just-in-time philosophy, and (2) product values decrease at a very fast rate over time because of advances in technology and keen competition. In this paper, we develop a process control model under a time-varying cost structure, based on internal and external failure costs. Using the model, we also study the process control policies when the value of the product may decrease over time. We consider two forms of product perishability. The first is an exponential product value drop, and the second is a fixed life product life.

Original languageEnglish
Pages (from-to)197-210
Number of pages14
JournalEuropean Journal of Operational Research
Issue number1
StatePublished - 16 Aug 2003


  • Inventory
  • Process control
  • Product perishability
  • Quality costs


Dive into the research topics of 'Optimal process control policies under a time-varying cost structure'. Together they form a unique fingerprint.

Cite this