Minimum-Loss Assembly Tolerance Allocation by Considering Product Degradation and Time Value of Money

In the optimisation of tolerance allocation for a mechanical assembly, much work has concentrated on the minimum cost– tolerance allocation without considering the quality of the final assembly. Cheng and Maghsoodloo combined the cost– tolerance function and quality loss function, to determine the optimal tolerances for individual components, so that the total assembly cost (including both tolerance cost and quality loss) might be minimised. The objective of this paper is to propose a model for optimal tolerance allocation by considering both tolerance cost and the present worth of quality loss such that the total assembly cost/loss is minimised. The proposed model takes into account the time value of money for quality loss and product degradation over time, and includes two new parameters: the planning horizon and the product user’s discount rate. From the result of this study, a longer planning horizon results in an increase in both tolerance cost and quality loss; however, a larger value of discount rate yields a decrease in both tolerance cost and quality loss.