Integrating an EMQ model and product quality

Abstract

In this paper we further extend Chen and Wang's study concerning a CSP‐1 plan applied to the economic manufacturing quantity (EMQ) model with imperfect quality. Adopting the backorder assumption for shortages, the modified total inventory cost includes the setup cost, the holding cost, the backordering cost, the inspection cost, and the internal and external failure cost. By solving the modified EMQ model, we not only obtain the required level of product quality but also determine the minimum of the total inventory cost.