ON THE USE OF BUFFER INVENTORIES TO MINIMIZE COSTS WITH AN UNRELIABLEMACHINE

In this paper, we discuss the problem of quality control with an unrel iable machine which produces defects at a rate of LAMBDA0 per unit whe n in-control and a rate of LAMBDA1 when out-of-control (where LAMBDA1 > LAMBA0). Every h time periods, we sample n units, count the number o f defects, and (using a process based on a Shewart c-chart) test the h ypothesis that the machine is in control by comparing the total number of defects to an upper control limit (UCL). More important, we introd uce the concept that a buffer inventory which immediately follows the unreliable machine may reduce expected total costs. This buffer serves to delay the movement of items from the unreliable machine to the nex t stage of the production process. In this way, we can isolate and rep air most defective items before they are embedded in a product downstr eam or sold to customers where repair is more costly. To search for th e optimal control policy, we find bounds for n, h, and UCL; given valu es for these variables, we show how the optimal buffer size can be det ermined directly. Numerical results illustrate the magnitude of potent ial savings.