Using simulation to investigate the costs of different inspection policies

1. Using simulation to investigate the costs of different inspection policies By Dr. Yasser Dessouky San Jose State University

2. Manufacturing Process

3. Manufacturing Costs

4. Inspection Strategies • Inspection after all 5 value adding process steps are complete. Rework if defective. • Inspection after each value added process step. Rework if defective. • No inspection before shipping.

5. Inspection Criteria

6. Inspection Costs • Rework and inspection costs are $25.00 and $20.00 per hour, respectively • If a bad part ships, we estimate that we incur $100.00 part in lost goodwill in addition to the $45.00 it costs to ship a good part to replace the bad one.

7. Inspection Guidelines • Manual inspection requires U (3,1) min to complete per piece. • The inspector’s find 90% of the bad pieces, but 10% of the bad pieces get shipped to customers • Those bad pieces that are found are sent to rework. • Rework is always successful, requiring ½ the time that the item has been in process to the time it is found to be defective.

8. Requirements • What is the process variation for each step in the process? • What is the total cost of each strategy? • What across the board percentage variation reduction is required to equal the “inspection at each process step” approach? • Suppose it costs $1000.00 for each 10% reduction in variation of any of the processes. How would you spend $50,000.00 to get the highest quality output?