Economic Order Quantity for Items with Two Types of Imperfect Quality

Abstract

The classical economic order quantity considers that the ordered items are of perfect quality. In this research, a model for the economic order quantity of imperfect quality items is developed, where the incoming lot has fractions of scrap and reworkable items. These fractions are considered to be random variables with known probability density functions. The demand is satisfied from perfect items and reworked items; whereas the scrap items are sold in a single batch at the end of the cycle with a salvage cost. A numerical analysis is provided to illustrate the sensitivity of the model to the fractions of scrap and reworked items.