372 European Journal of Operational Research 62 (1992) 372-379

North-Holland
Theory and Methodology
Sampling for quality inspection and
correction: AOQL performance criteria
J.P.C. Kl ei j nen, J. Kri ens, M. C. H. M. Lafleur and J.H.F. Pardoel
School of Business and Economics, Tilburg University, Tilburg, Netherlands
Received May 1990; revised February 1991
Abs t r ac t : By defi ni t i on, an Aver age Out goi ng Qual i t y Li mi t ( AOQL) sampling pl an l eads t o i nspect i on of
t he whol e popul at i on if t he sampl e shows a number of defect i ve i t ems k exceedi ng an accept ance
number k 0. The l i t er at ur e shows how this const ant k 0 and ot her r el at ed par amet er s can be chosen such
t hat t he expect ed val ue of / 5, t he fract i on of defect i ves af t er i nspect i on and possible cor r ect i on, does not
exceed a prespeci fi ed const ant /sm" Thi s paper studies several ot her cri t eri a t hat are i gnored in t he
l i t erat ure. It is based on an extensive Mont e Carl o simulation. Its mai n concl usi on is t hat AOQL
sampling is useful in pract i ce, including appl i cat i ons in auditing. Yet t he probabi l i t y t hat t he average
yearl y out goi ng fract i on ~ exceeds t he given const ant / 5, ~ can be sizable, if t he original bef or e- sampl i ng
fract i on p exceeds /sm-' mildly' . The paper f ur t her investigates t he effect s of splitting t he yearl y
popul at i on i nt o subpopul at i ons and t he effect s of under est i mat i ng t he original fract i on.
Keywords: Per cent age defect i ve; quality cont rol ; Mont e Carl o simulation; audi t i ng
1. I nt r oduct i on: AOQL
AOQL sampling pl ans wer e originally de-
signed for qual i t y cont r ol in industry. Nowadays
t hey are also appl i ed in auditing, whi ch i nspi red
this paper. Thi s cont r i but i on eval uat es t hese sam-
pling schemes, using several cri t eri a negl ect ed in
t he l i t erat ure, especially t he probabi l i t y of qual i t y
violations in t he short run, say a year.
AOQL sampling pl ans wer e i nt r oduced by
Dodge and Romi g ar ound 1930; see Dodge and
Romi g (1959). Thes e pl ans are discussed in t he
monogr aphs by Hal d (1981, pp. 116-124) and
Schilling (1982, pp. 372-399). Thei r pract i cal ap-
Correspondence to: J.P.C. Kleijnen, School of Business and
Economics, Katholieke Universiteit Brabant (Tilburg Univer-
sity), P.O. Box 90153, 5000 LE Tilburg, Netherlands.
pl i cat i on t o audi t i ng is st udi ed by Kri ens and
Veenst r a (1985). Nowadays, f ur t her i nt erest in
qual i t y cont r ol is st i mul at ed by t he Japanese
management phi l osophy; see Cross (1984) and
Wur ni k (1984). ( Some of t hese r ef er ences are t he
resul t of an extensive comput er i zed l i t er at ur e
search. )
The goal of AOQL sampling is t o guar ant ee a
mi ni mum quality af t er i nspect i on; this quality is
expressed as a maxi mum /5m f or t he expect ed
val ue of t he fract i on of defect i ves in t he popul a-
tion. For appl i cat i on in audi t i ng Kri ens and
Veenst r a (1985) split t he yearl y popul at i on into a
number of subpopul at i ons. The ' ori gi nal ' quality
of t he yearl y popul at i on - bef or e sampling and
cor r ect i on - is quant i fi ed by p, t he fract i on of
' defect i ve items' in t he yearl y popul at i on; also see
t he symbol list in Tabl e 1. The yearl y popul at i on
0377-2217/92/$05.00 1992 - Elsevier Science Publishers B.V. All rights reserved
J. P. C. Kl ei j nen et al. / A OQL Pe r f o r ma n c e cri t eri a 373
Table 1
Symbol list (in alphabetical order; random variables are un-
derscored)
J
k =
k 0 =
K =
n =
NY=
p =
/5 =
/5 =
s s
/ S I H
q =
~j =
R 2
S =
t =
X _
Number of simulated years in simulation
Number of defective items in sample
Acceptance number
Number of defective items in subpopulation
Sample size
Subpopulation size in subperiod s (s = 1 . . . . . S)
Estimated number of items per year
Original (before sampling) fraction of defectivenes in
yearly population
Estimate of p
Fraction of defectives after inspection and possible
correction
Outgoing fraction of defectives in period s (s = 1 . . . . . S)
Yearly outgoing fraction of defectives:
Prespecified constant (not to be exceeded by the ex-
pected value of / 5)
Probability of quality violation: P[_~ >/5,.]
Estimate of q after j replications
Measure of fit
Number of subpopulations per year
time
binomial variable with parameters J and q.
is not known until t he end of t he year; hence it
must be est i mat ed. The est i mat ed Number of
i t ems ( cor r ect plus def ect ) per Year is NY; for
exampl e, a company is expect ed t o pr oduce NY
cars per year; in audi t i ng, account s are sampl ed
and NY is meas ur ed in dol l ars per year. Conse-
quent l y, af t er i nspect i on and cor r ect i on, t he qual-
ity limit means t hat t he expect ed val ue of t he
r emai ni ng f r act i on of def ect i ves/ 3 r emai ns under
a maxi mum value/5, n, t he so-cal l ed Aver age Out -
going Qual i t y Limit.
The sampling scheme has t he following steps
(also see Tabl e 2 l at er on).
(i) At t he begi nni ng of t he year t he accoun-
t ant s est i mat e t he yearl y popul at i on size NY.
They also deci de on t he number of subpopul a-
t i ons S; for exampl e, S = 52 cor r esponds t o weeks.
At t he end of per i od s t he size of t he subpopul a-
tion t urns out t o be N~ (s = 1 . . . . . S). The choi ce
of S depends on t he organi zat i on.
(ii) Fr om each real i zed subpopul at i on, a sam-
ple of size n is t aken (n depends on several
par amet er s) .
(iii) Per sampl e t he number of defect i ve i t ems
k is det er mi ned by i nspect i on. Obvi ousl y k is
r andom, and t he i nt eger val ues k satisfy: 0 < k <
H.
(iv) I f and only if k exceeds a critical const ant
k 0 (which varies with n), t he whol e subpopul at i on
is i nspect ed and, by assumpt i on, all defect i ve
i t ems in t he s ubpopul at i on are cor r ect ed per-
fectly. (In auditing, defect i ves are er r or s t hat are
of t en r emoved by correct i ve actions; Hal d, 1981,
pp. 311-312, discusses i mper f ect i nspect i on and
cor r ect i on of items. ) If, however, k < k 0, t hen
onl y t he defect i ve i t ems f ound in t he s a mp l e are
cor r ect ed. So af t er this sampling, t he quality of
t he subpopul at i on is i mproved, unless no defec-
tives at all wer e f ound ( k = 0).
Denot e t he out goi ng fract i on of defect i ves in
per i od s by /5,. Then t he out goi ng fract i on of
defect i ves in t-he yearl y popul at i on is
2 = E P , _ I V, / EN_ ~ . (1. 1)
s =l s =l
Not e t hat ~ r educes t o /3 if t her e are no
subpopulation~. The audi t or ~vishes t he average
out goi ng fract i on ~ not to exceed t he limit of
defect i veness, / )m" go, given a cor r ect sel ect i on of
t he sampling pl an' s par amet er s n and k 0, t he
yearl y out goi ng fract i on ~ shoul d satisfy t he con-
di t i on E[ ~] </5 m. Obviously, if t he original (be-
f or e saml~ling) fract i on was very good al ready
(say, p = 0), t hen E[ ~] </3 m. If this quality was
very bad ( p >>/Sm), ~ e n t he sampling pl an im-
plies t hat sampling is (nearl y) always fol l owed by
i nspect i on and cor r ect i on of t he whol e subpopu-
lation, so E( ~) <</ 5 m. Thi s gives Fi gure 1 wher e
Table 2
Sample size n and acceptance number k0, given before-sam-
pling fraction p, subpopalation size N,, and defectiveness
limit /5,,,; here /5m = 1%
Subpopulation
size N~
N~
Before-sampling fraction p
0-0.02 . 0.21-0.40 .. 0.81-1.00
n k o n k 0 n k.
1-25
26-50
80i-1000
1001-2000
2000i-50000
50001-100000
All 0 All 0 All 0
22 0 22 0 22 0
35 0 80 1 120 2
36 0 80 1 18(I 3
85 1 255 4 990 15
85 1 255 4 1520 22
374 J.P.C. Kleijnen et al. /AOQL Performance criteria
p* is the 'least favorable' value of p; this figure
assumes that there are no subpopulations.
Next, we consider the sampling plan's parame-
ters. Because sampling is without replacement, k
follows the hypergeometric distribution with pa-
rameters n, p and N s. The literature proves that
the critical constant k 0 and the sample size n can
be computed such that the condition E[/3]-~Pm
holds; moreover the expected costs can be mini-
mized if p is known; we shall return to this issue.
Unfortunately, the original tables in Dodge and
Romig (1959) contain some inaccuracies; see Hald
(1981, p. 124) and Van Batenburg, Kriens and
Veenstra (1988). Therefore we use our own ta-
bles. Table 2 gives an example of a part of such a
table. Tables for very small/3m-values are given in
Cross (1988), while Wurnik (1984) gives nomo-
grams for k 0 = 0.
In practice the before-sampling fraction p is
unknown. In some applications the right most
column is used; in other applications the left
most column is taken. Dodge recommended use
of the right most column for at least two reasons:
(i) the sample sizes are larger for most Ns and
hence, more reliable estimates of p are gener-
ated faster, and (ii) these sampling plans are
generally more discriminating; also see Schilling
(1982, p. 375). Our study, however, originates
from questions raised by Dutch auditors. They
always try to create situations with values of p as
small as possible. Only if the auditors expect p to
have a small value, will they apply statistical
sampling procedures; therefore, if the AOQL
procedure is used, they take the left most columns
of tables like Table 2.
Even-if p is estimated wrongly, the quality
constraint E[/3]</3,n is satisfied; the expected
costs, however, may increase. Moreover, practi-
tioners usually conjecture that the probability of
excessive defectiveness is negligible. Figure 1
shows that if the original fractions p were always
least favorable (p =p*) and /~ were distributed
symmetrically, then the probffbility of a quality
violation would be 50%: P(/3 >/5 m) = 0.50. Prac-
titioners presume that actually the probability for
the average fraction is nearly zero: P( ~ >/~m) =
0.00. This conjecture is the main focus of our
simulation. (Hald, 1981, p. 310, gives analytical
approximations for this probability.)
It hardly takes more computer simulation time
to estimate how bad the value ,5 is i f the con-
straint ~ <~/~m is violated. Therefore we also esti-
mate the following conditional expectation:
The next sections will show that this paper has
the following contributions:
(i) It quantifies the effects of splitting the
estimated yearly population (NY) into S subpopu-
lations. A higher S leads to a lower expected
constraint violation E(~ -/Sin [ ~ >/3 m) (as Figure
4 will show).
(ii) It quantifies not only
outgoing fraction ~ (Figure 2)
bility of a constra]nt violation
3). That probability may be as
is certainly not negligible!
(iii) It estimates the effects
the before-sampling fraction
the average yearly
but also the proba-
P(~ >/~m) (Figure
high as 40%, which
of underestimating
p if pract i t i oners
t
Pm[ Oua1ty lmt
~ ~ P
p~
Figure 1. Expected fraction of defectives a~er sampling E(~)versus fraction before sampling p (different scales on different axes)
J.P.C. Kleijnen et al. / A OQL Performance criteria 375
0 . 0 1 1
0 . 0 1 0
0 . 0 0 9
0 . 0 0 8
0 . 0 0 7
0 . 0 0 6
0 . 0 0 5
0 . 0 0 4
0 . 0 0 3
0 . 0 0 2
0 . 0 0 1
0 . 0 0 0 -
Theory
. ~ Q u a l i t y l i m i t p m = 0 . 0 1
P
l i I l i I , i i I
0 . 0 0 0 0 . 0 0 5 0 . 0 1 0 0 . 0 1 5 0 . 0 2 0 0 . 0 2 5 0 . 0 3 0 0 . 0 3 5 0 . 0 4 0
Figure 2. Average yearly outgoing qual i t y ~ versus fraction of defectives before sampling (yearly population NY = 1000000;
subperiods S = 52)
use only the l eft most columns of tables like
Table 2. This practice results in higher costs
(Figure 5) while the probabi l i ty of a constraint
violation may nevertheless increase (Figure 3).
(iv) It gives more insight into AOQL plans.
For example, higher variability in the before-sam-
pling fraction p (over subpopulations) gives addi-
tional protection (see Section 2). Estimation of p
~(:_p ~m )
0 . 5 0 -
0 . 4 5 -
0 . 4 0 -
0 . 3 5 -
0 . 3 0 -
0 . 2 5 -
0 . 2 0 -
0 . 1 5 -
0 . i 0 -
0 . 0 5
0 . 0 0
l
0 . 0 0 0 0 . 0 0 5
! ! ! I ! ! I P
0 . 0 1 0 0 . 0 1 5 0 . 0 2 0 0 . 0 2 5 0 . 0 3 0 0 . 0 3 5 0 . 0 4 0
Figure 3. Estimated probability of excessive defectiveness, P ( ~ >/ 3m) ( NY = 100000; S = 52)
376 J.P.C. Kleijnen et aL / A OQL Performance criteria
~(_~ - IP m I P > P m ) X i 0 0 0
4 . 0
3 . 5
3 . 0
S = 4
2 . 5
2 . 0
S = 13
1 . 5 -
1 . 0 -
0 . 5 -
O . O -
P
" ' ' o ' ' o ' ' ' 0.010 O. 12 0.014 O. 16 0.018 0 . 0 2 0
(Pm)
Figure 4. Est i mat ed value /~ of excessive defectiveness, E( ~
- P m I_P >Pm ) in theoretical approach (NY = 1000000)
is important; the paper suggests a simple estima-
tion scheme based on the AOQL scheme itself
(Section 3).
2. Design of Monte Carlo experiment
Table 2 illustrated that the sample size n and
the acceptance number k 0 are completely deter-
mined by the subpopulation size Ns, the before-
sampling fraction p, and the defectiveness limit
/5,,. That subpopulation size N s depends on the
estimated yearly population size NY and on the
number of subperiods S. In the simulation we
study three values for S, namely 4, 13, and 52
which correspond to quarters, 'months', and
weeks; these periods are traditional in accounting
practice. The magnitude of NY in the simulation
is based on our experience with auditing applica-
tions: NY is 10000 or 100000 or 1000000. We
assume that _Ns is uniformly and independently
distributed with expected value NY/ S; the range
is such that the coefficient of variation is roughly
6%, which is an arbitrarily selected value. Note
that the actual yearly amount y-.s N~ deviates
from the estimate NY, with probability one.
We further select the following six values for
the defectiveness limit/sin: 0.1%, 0.5%, 1%, 2%,
5%, 10%. Selection of the before-sampling frac-
tion p in the simulation should relate to the
defectiveness limit /sm, which can be seen as
follows. If p were very high, then the AOQL
scheme would be futile: sampling would usually
be followed by inspection of the whole subpopu-
lation. Therefore we restrict the simulation to
p < 6/3,,. There are no tables available for p >
2/3 m. This, however, is no problem if only the left
most columns of the tables are used (see Section
1). Obviously not all subpopulations have the
* 1 0 0 %
1 . 2 -
I . i -
1 . 0 -
0 . 9 -
0 . 8 -
0 . 7 -
0 . 6 -
0 . 5 -
0 . 4 -
0 . 3 -
0 . 2 -
0 . 1 -
0 . 0 -
P r a c t i c e
i I I I I | I
0 . 0 0 0 0 . 0 0 5 0 . 0 1 0 0 . 0 1 5 0 . 0 2 0 0 . 0 2 5 0 . 0 3 0 0 . 0 3 5
(Pm)
Figure 5 Est i mat ed fraction of subpopulations, fully inspected (NY = 1000000; S = 52)
/
J
mP
0.040
J.P.C. Kleijnen et al. / AOQL Performance criteria 377
same p, even if all subpopul at i ons have t he same
expect ed val ue E ( p ) . The r e f or e we sampl e p.
Fi gur e 1 demonst ra/ -ed t hat t he per f or mance E( ~ )
i mproves as p devi at es f r om t he l east favorat ~e
val ue p*. In pr el i mi nar y si mul at i on exper i ment s
we sampl ed p f r om a di st ri but i on wi t h a high
vari ance, a nd- i nde e d ,6 decr eased (not f ur t her
r epor t ed in this paper ) . The r e f or e we concent r at e
t he si mul at i on on wor s t cases: p has a r ange of
onl y 0.2 i~m (several di st ri but i ons of p ar e dis-
cussed in Case and Keats, 1982). We f ur t her
assume t hat p is uni forml y di st r i but ed over t hat
range. We do- change t he expect ed val ue E[ 17 ]: p
varies bet ween 0 and 6/7 m as we expl ai ned above.
So we sampl e p f r om t he uni f or m di st ri but i on
bet ween 0 and 0.2/~m, bet ween 0.2/3 m and
0.4/~ m . . . . . bet ween 5.8/3 m and 6/3 m. Fi gures 2
t hr ough 5 do not ext end t o p = 6/7 m because t he
pat t er n is cl ear f r om fi gures f or smal l er val ues of
p.
In t ot al we si mul at e 1620 f act or combi nat i ons
while using onl y t he l eft most col umns of t he
tables; this we call t he ' pr act i t i oner ' s appr oach' ,
whi ch is abbr evi at ed t o ' Pr act i ce' in Fi gures 2, 3,
and 5. We si mul at e 540 combi nat i ons wi t h t he
opt i mal [n, k 0] combi nat i ons: ' t heor et i cal ap-
pr oach' , abbr evi at ed t o ' Theor y' in t hese figures.
The r e is an i mpor t ant t echni cal issue in t he
simulation: how of t en (how many years) shoul d
each f act or combi nat i on be si mul at ed in or der t o
obt ai n reliable es t i mat es of per f or mance cri t eri a
such as P[, ~ >/Sin]? By defi ni t i on, one r epl i cat i on
( one s i mu~t ed year ) yields a bi nomi al vari abl e
(say) _x wi t h q =P(_x = 0) = P [ ~ >/3m]. When t he
nor mal appr oxi mat i on t o t he- bi nomi al distribu-
t i on is used, it is st rai ght forward to deri ve J, t he
number of si mul at ed years ne e de d t o est i mat e q
with ei t her a rel at i ve preci si on of 10% or an
absol ut e preci si on of 0.001; see Kl ei j nen (1987,
pp. 46-51). We st op as soon as one of t hese
r equi r ement s is satisfied. Thi s appr oxi mat i on
shows t hat we need at mo s t 16221 repl i cat i ons t o
satisfy ei t her t he rel at i ve preci si on or t he abso-
l ut e preci si on r equi r ement , wi t h a one- si ded
probabi l i t y of 10%; this maxi mum occurs when
q =0. 01. Act ual l y we do not know q. So we
subst i t ut e t he ' cur r ent ' est i mat e of q af t er at
l east 100 repl i cat i ons; t hat is, we subst i t ut e t he
est i mat e 0j available af t er j repl i cat i ons with
j = 100, 101 . . . . , J. The average number of repli-
cat i ons t urns out t o be roughl y 1000. We exami ne
not onl y t he per f or mance cri t eri on q = P[ ~ >/3m],
but several mor e cri t eri a. Yet , since tffe mai n
cri t eri on is q, we concent r at e on q t o sel ect t he
number of repl i cat i ons. The next sect i on will show
t hat t he si mul at i on resul t s show pat t er ns not ob-
scur ed by t oo much noise.
It t akes 40 hour s of comput er t i me on a VAX-
780 mi ni comput er t o si mul at e 1620 pl us 540 fac-
t or combi nat i ons, each combi nat i on r epl i cat ed
roughl y 1000 times. We woul d have ne e de d even
mor e comput er t i me, had we not i nt r oduced t he
following approxi mat i on. The number of defec-
tives k has a hyper geomet r i c di st r i but i on (see
Sect i on 1: sampl i ng wi t hout r epl acement ) . The
bi nomi al di st ri but i on (sampl i ng with r epl ace-
ment ) gives a good appr oxi mat i on pr ovi ded n <<
N~, whi ch is of t en t he case (but not always: if NY
is small, t hen it may happen t hat n > Ns); see
Tabl e 2. In t urn, t he Poi sson di st ri but i on provi des
a good appr oxi mat i on t o t he bi nomi al distribu-
t i on if p is small; see Schilling (1982, p. 64). We
use t he l at t er approxi mat i on, simulating t he Pois-
son di st ri but i on t hr ough t he subr out i ne in Nayl or
et al. (1966, p. 114). Thi s Poi sson pr ogr am runs
20 t i mes f ast er t han t he hyper geomet r i c pr ogr am
does on our comput er .
For compl et eness sake we ment i on t hat we use
t he mul t i pl i cat i ve congr uent i al ps eudor andom
number gener at or with mul t i pl i er 1313 and modu-
lus 259 . Thi s gener at or was devel oped and t est ed
by NAG ( Numer i cal Al gori t hms Gr oup) in t he
Uni t ed Ki ngdom.
3. Mo n t e Ca r l o r e s ul t s
The Mont e Carl o exper i ment yields an enor -
mous amount of dat a. We anal yze t hese dat a
t hr ough regressi on analysis (using SAS), in or der
t o smoot h t he observat i ons and t o obt ai n succinct
r epr esent at i ons. Pr el i mi nar y pl ot s l ooked like
gamma funct i ons. Ther ef or e we fit such a non-
l i near regressi on model f or t he yearl y out goi ng
f r act i on ~ versus t he original f r act i on p, whi ch
yields Fi gur e 2 ( wher e ' Pr act i ce' r ef er s t o using
onl y t he l eft most col umns of t he tables, and
' Theor y' r ef er s t o t he opt i mal (n, k 0) combi na-
tions; see Sect i on 2). The regressi on model has an
R 2 adj ust ed for t he number of expl anat or y vari-
ables t hat is hi gher t han 0.95. Fi gur e 2 looks like
t he t heor et i cal Fi gur e 1: t her e is a l east favorabl e
378 J.P.C. Kleijnen et al. / AOQL Performance criteria
value for p and ~ remai ns below ~/~m" This result
is not surprising, but it verifies t he correctness of
our si mul at i on program!
I f t he original fract i on p satisfies p </~m, t hen
obviously q = P [ ~ >/~m] = 0. If, however, p >/~m,
t hen we again f i t a funct i on like t he gamma
funct i on, which yields Fi gure 3. Agai n R 2 is high:
R 2= 0.99 for t he t heoret i cal approach, and 0.74
for t he pract i t i oner' s approach. Fi gure 3 shows
t hat t here is a sizable probability of violating t he
limit on t he defectiveness, if t he ' pract i t i oner' s
approach' is followed. The worst case is an esti-
mat ed probability of 0.618 for p = 0.017 (this is
one of t he observations to which t he curve is
fitted). We repeat , however, t hat t he si mul at i on
concerns worst cases (since t he fract i on p of t he
subpopul at i on is sampl ed from a uni form distri-
but i on wi t h a small range; see Section 2).
I f / ~ > Pm, t hen how bad is t he excessive defec-
tiveness E [ ~ - / 5 m I ~ >/3m]? Fi gure 4 shows t hat
smaller sub~eriods (hi gher S) give extra protec-
tion. Our expl anat i on follows from Tabl e 2: if t he
subpopul at i on size N is halved (say, from 2000 to
1000 units), t hen t he sample size n decreases only
slightly (from 36 to 35); so if t he number of
subpopul at i ons S increases, t hen Ns decreases,
but t he total sample size over a whole year in-
creases drastically.
Next, we consi der t he costs of t he sampling
plans. Specification of cost funct i ons is r at her
arbitrary, so we use t he fract i on of t he subpopu-
lations t hat is rej ect ed and fully inspected. (For
specific cost funct i ons we refer t o Ercan et al.,
1974, Hal d, 1981, and Schnei der et al., 1988.) The
AOQL scheme implies t hat all N~ units (of a
subperi od) are i nspect ed if k > k 0. Fi gure 5 shows
t hat t he fract i on of fully i nspect ed subpopul at i ons
increases drastically if p >/5 m. Obviously t he
pract i t i oner' s approach is more expensive. The
curves are hardl y affect ed by S, t he number of
subperi ods (not displayed).
Not e t hat t he si mul at i on shows t hat it is im-
por t ant to have a good estimate of p, t he before-
sampling fract i on of defectives. We mi ght use t he
est i mat or /3 = k / n if k < k0, and /3 = K/_N~ if
k > k 0 where K denot es t he number of defec-
tives in t he subpopul at i on (of size _N~). As t i me t
goes on, we obt ai n a series of est i mat ors _Pt,
which can be combi ned; for example, we may
weigh fit wi t h t he sample size n t if k < k 0 and
t he subpopul at i on size N t if k > k 0. I f / 3 t shows
serial correl at i on or non-st at i onary behavior, we
may apply t i me series techniques. A di fferent
approach uses prior distributions; it is discussed
by Hal d (1981, pp. 15-21, 125-138, 335, 424-425).
Since we di d not investigate our procedure for
est i mat i ng p, we do not know if our heuristic is
bet t er t han Hal d' s approach is.
4. Conclusions
AOQL sampling plans are i ndeed used in
practice, including auditing. It mi ght be assumed
t hat if t he expected yearl y fract i on of defectives
aft er inspection and correct i on E(, ~) meet s t he
limit on defectiveness/Sin, t hen t he -probability of
exceeding t hat l i mi t / ~, , is negligible:
However, si mul at i on dat a anal yzed by regres-
sion model s yi el ded Fi gure 3, which shows t hat
this probability is sizable if t he before-sampl i ng
fract i on p is hi gher t han t he limit /~m but not
ext remel y high (if p </~m, t hen obviously ,~ can-
not exceed /~m; if p >>/~m, t hen sampling is usu-
ally followed by inspection of t he whole subpopu-
lation). If p varies much over subperiods, t hen
P[ ~>/ ~, , ] - de c r e a s e s (we si mul at ed worst case
situations: small ranges of p). Fi gure 4 shows t hat
increasing t he number of peri ods S decreases t he
magni t ude of t he expect ed const rai nt violation.
Under est i mat i ng p is not wise: it does not give
extra prot ect i on (in Fi gure 3 t he ' Pract i ce' curve
lies above t he ' Theor y' curve); yet more inspec-
tion work is done (Fi gure 5). So in practice one
shoul d obt ai n more i nformat i on about p, One
mi ght get estimates of p from t he sampling pro-
cedure itself: if k < k 0, t hen /~ = k / n ; else /~ =
K/(_N s. To reduce and control p itself means That
t he inspection costs decrease (Fi gure 5); t he ex-
pect ed value of t he excessive defectiveness also
decreases (Fi gure 4). I f p approaches t he least
favorable value p* from above, t hen t he proba-
bility of excessive defectiveness increases (Fi gure
3) and t he average quality det eri orat es (Fi gure 2).
The drive t owards zero defects ( p = 0) gives best
results.
J.P.C. Kleijnen et al. / AOQL Performance criteria 379
Acknowledgments
We t h a n k t h r e e a n o n y mo u s r e f e r e e s f or c o m-
me n t s t h a t l e a d t o a b e t t e r p r e s e n t a t i o n .
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