An Integrated Process Targeting and Continuous Review System with Inspection Sampling

In the literature of integrated targeting-inventory models, it is common to assume 100% inspection of produced items. However, in some cases as for. destructive testing this assumption becomes unrealistic. To investigate the impact of sampling-based inspection on integrated targeting-inventory systems, this project integrates process targeting and continuous review inventory model with inspection sampling plan. The objective of the model is to simultaneously determine, the optimal process mean, production lot size, and reorder point, under a given inspection sampling plan. The reorder point includes mean lead-time demand and two types of safety stock; one due to demand uncertainty during lead-time and one due to the defectives in the received lot. A solution procedure and illustrative numerical examples will be provided