Abstract
In this paper, an economic production quantity (EPQ) inventory model with interruption in process, scrap and rework is developed and analyzed. The inventory model is for multiple products and all products are manufactured in a unique machine. Obviously, the existence of only one machine results in limited production capacity and shortages. Therefore, shortages are permitted and fully backordered. In this EPQ inventory model, the decision variables are cycle length and backordered quantities of each product and the main objective is to minimize the expected total cost. An easy to use solution procedure is developed for finding the optimal solution. Numerical examples are provided to perform a sensitivity analysis. Finally, some conclusions and future researches are included.
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