Production inventory model with reworking of imperfect items and integrates cost reduction delivery policy

Abstract

The classical EPQ model assumes that all items manufactured are of perfect quality. However, in real life production systems, due to various controllable and/or uncontrollable factors, the generation of defective items during a production run seems to be inevitable they should be reworked. A portion of non-conforming items produced is considered to be scrap, while the rest reworked in each cycle. This paper integrates cost reduction delivery policy into production inventory model with defective items with scrap and rework and finished items can only be delivered to customers at a fixed interval of time during production downtime with the purpose of reducing holding cost. A suitable mathematical model is developed and the optimal production lot size which minimises the total cost is derived. An illustrative example is provided and numerically verified. The validation of result in this model was coded in Microsoft Visual Basic 6.0.