Economic Order Quantity Models for the Remanufacturing Industry with Imperfect Process, Two- State Markovian, and Two Types of Inventory

Abstract

An economic order quantity model for an imperfect manufacturing process and imperfect items is proposed. The remanufacturing industry converts used parts to aftermarket usable parts. The remanufacturing process is imperfect; a probability is known that an item after manufacturing is not repaired, and hence, this item is sent back to the inventory of damaged items for another round of remanufacturing. A discrete Markov chains model describes the transitional probabilities of the state of the item after the remanufacture. The first inventory model is proposed to identify the optimal order size of imperfect items, assuming the imperfect items arrive at a constant and finite rate. The second proposed model assumes an infinite arrival rate; hence, in essence imperfect items arrive in one batch. For both cases of the inventory models, the optimal economic order quantity is derived based on the expected average cost functions per time to the remanufacturer.