Abstract
The paper considers a sequential inspection policy in an imperfect production process which shifts randomly from an ‘in-control' state to an ‘out-of-control' state following a general probability distribution. The manufacturer is in a contractual agreement with the customer to provide free minimal repair service until a certain (warranty) period from the time of initial purchase. The objective is to determine the optimal number of inspections and inspection time sequence during a production run which minimize the manufacturer's future expected costs in present term or average cost in distant future.
