Economic order quantity model and Taguchi’s cost of poor quality

Abstract

In this paper we consider defective products and Taguchi’s cost of poor quality in the economic order quantity (EOQ) model. We assume that the product quality performs a normal distribution function, and the Taguchi’s poor quality cost has been involved. From our analysis, it has been found that the annual profit will be decreased if the poor quality of product and Taguchi’s quality cost are involved in the model. It has also been found that economic order quantity in our model is larger than that in a traditional EOQ model.