An EPQ model with reliability in an imperfect production system at the presence of two sale policies of prepayment and delay in payment

Abstract

An economic production quantity model is developed in this paper for an imperfect production system. The conditions which are considered for this model involve inflation, deterioration, rising prices under inflation, and price-dependent demand. The demand becomes principally dependent on the time due to the dependency of the price on the time. In this model, it is assumed that in the specified conditions, production system shifts from in-control state to out of control state and produce imperfect items which must be reworked by spending a specified cost in order to be ready for sale. In order to reduce the imperfect items production, we must increase the system's reliability that requires further investment for improvement of production system. The proposed model finds out the optimal case among these costs by selecting the reliability as the decision making variable. The numerical example, diagrams and sensitivity analysis have been provided to illustrate the model.