This paper examines tradeoffs between two means of improving system reliabi
lity. These are: (1) increasing component reliability through more stringen
t acceptance sampling, and (2) improving system reliability through increas
es in component redundancy. The paper also demonstrates methods for generat
ing probability distributions on system reliability. This is done by specif
ying a prior distribution on the number of defects in a lot, revising this
distribution based on information in the acceptance sample, then transformi
ng the posterior distribution on the number of defects into a distribution
on reliability for a given system. Finally, the paper demonstrates the use
of stochastic dominance decision criteria to analyze the tradeoffs between
redundancy and component reliability. All computational work for this paper
was done using EXCEL 4.0. (C) 2000 Elsevier Science Ltd. All rights reserv
ed.