A real options design for quality control charts

We develop a financial model for a manufacturing process where quality can be affected by an assignable cause. We evaluate the options associated with applying a statistical process control chart using pentanomial lattice and Monte Carlo simulation methods. By connecting the aspects of market dynamics with the manufacturing operational aspects, we now have a way to help decision makers address the bottom-line profitability associated with the quality control decision.

• Type: Conference
• Year: 2000
• Where: WSC
• Authors: Harriet Black Nembhard, Leyuan Shi, Mehmet Aktan
• Keywords: Modeling And Simulation, Monte Carlo Simulation, Process Control Chart, Quality Control Decision, WSC 2000