Date of Award

1990

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

First Advisor

Kwei Tang

Abstract

A two-stage screening procedure is developed for a situation where the items can be sold in one of two markets, or scrapped. The item's selling price and product specifications differ for each market. In the first stage of the screening procedure, each item is inspected on a surrogate variable that is correlated with the performance variable of interest. If a decision is not reached at this point, the item is subjected to a second-stage inspection on a performance variable. A loss in selling price is incurred by the producer when an item that meets the specifications of a higher-price market is sold to a lower-price market. The producer also sustains a loss when an item that does not conform to the product specifications of a market is sold in that market. The economic factors considered in the model, therefore, are the selling price and the cost consequences resulting from decision errors. The optimal screening specification limits are determined by maximizing the expected profit per unit.

Pages

112

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