Decision support for field quality problems under uncertainty

Abstract

A quick decision on implementation of countermeasures for quality problems is important for reducing the quality cost of electronic products. At the beginning of the production period, the claim rate is uncertain owing to the lack of sufficient field claim data. Therefore, a quick decision on implementation of countermeasures may lead to misjudgment. On the other hand, until the end of the production period, there is an option to postpone the decision. When the option to postpone the decision is exercised, increased field claim data will reduce the uncertainty of the claim rate. Then the probability of misjudgment will decrease. However, postponing the decision may increase the number of inferior products before the countermeasures. In order to support the decision on implementation of countermeasures for quality problems under uncertainty, we propose a new method that combines Bayesian updating and real options. We evaluate the value of the option to postpone the decision qualitatively and show the possibility of reducing the quality cost. © The Operations Research Society of Japan.