Determining Optimum Reject Allowances for Multistage Job-Lot Manufacturing

Abstract

Since most manufacturing processes inevitably produce some defective items, it is common practice to produce a quantity larger than the actual order size. This excess is called a reject allowance. This article considers multistage job-lot manufacture where items are produced by a sequence of n stages (operations). It demonstrates that under appropriate conditions, the total expected cost function is uni-modal which establishes the existence of a smallest optimum reject allowance. Computation procedures are also discussed.