An EMQ inventory model for defective products involving rework and sales team’s initiatives-dependent demand

S Priyan,R Uthayakumar

doi:10.1007/s40092-015-0118-6

S Priyan, R Uthayakumar

Open Access

https://doi.org/10.1007/s40092-015-0118-6

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Abstract

This paper investigates the issue of an economic manufacturing quantity model for defective products involving imperfect production processes and rework. We consider that the demand is sensitive to promotional efforts/sales teams’ initiatives as well as the setup cost can be reduced through further investment. It also assumes that fixed quantity multiple installments of the finished batch are delivered to customers at a fixed interval of time. The long-run average cost function is derived and its convexity is proved via differential calculus. An effective iterative solution procedure is developed to achieve optimal replenishment lot-size, setup cost and the initiatives of sales teams so that the total cost of system is minimized. Numerical and sensitivity analyses are performed to evaluate the outcome of the proposed solution procedure presented in this research.

Highlights

In 1913, Harris (1990) first proposed the economic order quantity (EOQ) model to help companies in minimizing total inventory costs
This paper investigates the issue of an economic manufacturing quantity model for defective products involving imperfect production processes and rework
We consider that the demand is sensitive to promotional efforts/sales teams’ initiatives as well as the setup cost can be reduced through further investment

Summary

Introduction

In 1913, Harris (1990) first proposed the economic order quantity (EOQ) model to help companies in minimizing total inventory costs. Sana (2011) has developed EOQ model for similar products when the demand of the end customers depends on the stock level, selling price and sales teams’ initiatives. Chiu et al (2011) developed an inventory model based on EMQ considering rework and multiple shipments. They optimize the replenishment lot-size using differential calculus technique. Porteus (1985) first introduced the concept and developed a framework for investing in reducing EOQ model setup cost. Review of literature reveals that none of the authors developed an EMQ inventory model for defective products involving imperfect production processes and rework with setup cost reduction and multiple shipments under sales teams’ initiatives-dependent demand.

P a Pr

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Conclusion