An Production Inventory Model with Imperfect Production and Risk

Abstract

A single item production system has been considered in this proposed work. It is also assumed that the system produced some imperfect items. For this purpose a screening process has been considered here to separate the perfect quality items and imperfect quality items. The perfect quality items have a demand in the market which is depended on the advertisement of the product as well as the selling price of the product. The imperfect quality items are sold in a lot after the production period. As the depreciation rate of the product increases and number of imperfect product increases then there will be a risk in the system of loss in profit. So a risk function has been considered here depending on the depreciation rate of the demand and imperfect production rate of the item. Keeping these phenomenon the proposed model has been maximize for profit and minimize for the risk with numerical illustration.