Economic Order Quantity Model for Imperfect Items with Shortage and Trade Credit

Abstract

The economic order quantity (EOQ) model for items with a certain percentage of defectives and shortages permitted is proposed in this paper. By considering that suppliers usually provide a credit period for the retailers as an ordering cycle in practice, and defective rate obey a certain distribution. The model of inventory with the objective function of the maximum expected profit was developed. Finally, numerical example is presented and the effects of parameters on the optimal solutions are analyzed.