Abstract
The classical economic order quantity considers that the ordered items are of perfect quality. In this research, a model for the economic order quantity of imperfect quality items is developed, where the incoming lot has fractions of scrap and reworkable items. These fractions are considered to be random variables with known probability density functions. The demand is satisfied from perfect items and reworked items; whereas the scrap items are sold in a single batch at the end of the cycle with a salvage cost. A numerical analysis is provided to illustrate the sensitivity of the model to the fractions of scrap and reworked items.
Highlights
The economic order quantity is an old topic for research, it still is of wide interest to many industries today
We develop an inventory model where the incoming lot has imperfect quality items, either scrap or re-workable
The economic order quantity is developed for the inventory model with imperfect quality items
Summary
The economic order quantity is an old topic for research, it still is of wide interest to many industries today. Salameh and Jaber [16] have hypothesized a production/inventory situation where items, received or produced, are not of perfect quality They consider the issue that poor quality items are sold as a single batch by the end of the 100% inspection process. Maddah and Jaber [19] have rectified a flaw in an economic order quantity model with unreliable supply, characterized by a random fraction of imperfect quality items and a screening process, developed by Salameh and Jaber [16]. They have analyzed the effect of screening speed and variability of the supply process on the order quantity They extend the model by allowing for several batches of imperfect quality items to be consolidated and shipped in one lot. Mathematical Model Since shortage is not allowed, to avoid shortage, the number of good items is at least equal to the demand during inspection time:
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