Optimal Scheduling of Fallible Inspections

Giovanni Parmigiani
Duke University

Jul 29 1993

This paper gives the exact optimal solution to the problem of designing inspection schedules with fallible and time-consuming test procedures. The optimality criterion is designed to achieve a balance between the cost of inspections and the cost of undetected failure. The solution is derived in continuous time, with arbitrary failure distribution, and is based on infinite horizon dynamic programming with time dependent utilities, and with an additional optimization with respect to initial conditions. Results include uniqueness and monotonicity properties of the optimal solution, as well as computational algorithms.


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