This paper introduces a three-level hierarchical production planning and scheduling approach for multi-product and identical parallel machines in a batch process environment. The hierarchical approach extends the existing formulation and determines the optimal number of monthly batches that need to be scheduled, a process known in this industry as 'batching of orders'. At the top level of the hierarchy the approach deploys a mixed-integer linear programming model to solve the aggregate plans, where set-ups occur. At the second level, a weighted-integer goal programming model is developed to disaggregate the aggregate plans and provide an optimal number of monthly batches to be sequenced in presence of set-up time. At the bottom of the hierarchy, a job sequencing model is formulated, as a mixed-integer programming model that deals with sequencing of batches on parallel machines, with earliness and tardiness penalties and set-up time constraints. Real industrial data are used to test and validate the proposed models. Comparisons of models' results and company's actual performance indicate that, if the company implements our proposed approach, significant cost savings could be achieved.

Purpose – The purpose of this study is to present a report on the development of an improved mathematical model for quantifying the cost of quality. In addition, a simulation model is developed using real-life industrial data; the model is used to investigate the impact of certain quality control level plans on cost of quality. Design/methodology/approach – The cost of the quality model was developed based on the reported literature and suggestion from the company quality control manager. An extensive discussion was conducted with the quality control supervisors in the company to develop some quality control plans to investigate their impact on cost of quality. A simulation model that represents a specific section of the process at the company was used to carry out the investigation. The results were analysed and compared with some important findings reported in the literature that describe the characteristics of costs of quality. Findings – The simulation work provides valuable insights into the behavior of the different components that constitute the total cost of quality. The results show that reduction of failure costs can be achieved at low or no-subsequent increase in the non-conformance expenditure. In addition, it seems that the traditional accounting system approach may no longer be adequate since it depends mainly on direct labour costs. The results indicate that the direct labour cost is only contributing by about 3 percent of the total cost of quality. Research limitations/implications – This paper focuses on the development of a comprehensive model for quantifying the cost of quality in a semiconductor company. Future research is needed to expand the model for more complex process configuration. In addition, the developed model could be extended to deal with variant defect rates. Originality/value – This study presents an advanced theoretical model for cost quality that enhanced models of quality presented in the literature. Using the developed cost of the quality model, a comprehensive simulation was carried out to investigate the impact of some quality plans on cost of quality. The study clearly indicates important evidence to justify the implementation of cost of quality models in real-life industry.

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