The presence of Type I and Type II inspection errors may seriously affect the product quality. In this paper we incorporate them into the EMQ (Economic Manufacturing Quantity) model under the imperfect production system. We derive the expected total cost when the shift of the production process follows a general distribution and the inspection interval is arbitrary. The objective is to determine the optimal production cycle length and optimal inspection number while minimizing the total cost. Results for special shift distributions such as exponential and Weibull are established. Sensitivity analysis of the optimal production cycle length and analysis of the cost surplus for incorporating inspection errors under exponential shift distribution are also provided.
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Liou et al. (1994) studied this question.
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