An EPQ Model for Deteriorating Items With Imperfect Production, Two Types of Inspection Errors and Rework Under Complete Backordering

Chayanika Rout, Debjani Chakraborty () and Adrijit Goswami ()
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Chayanika Rout: Department of Mathematics, Indian Institute of Technology Kharagpur, Kharagpur, India
Debjani Chakraborty: Department of Mathematics, Indian Institute of Technology Kharagpur, Kharagpur, India
Adrijit Goswami: Department of Mathematics, Indian Institute of Technology Kharagpur, Kharagpur, India

International Game Theory Review (IGTR), 2020, vol. 22, issue 02, 1-18

Abstract: This paper presents an EPQ model which illustrates imperfect production and imperfect inspection processes for items that are subject to a constant rate of deterioration. The model considers two types of inspection errors, namely, Type I error of falsely screening out a proportion of nondefects, thereby passing them on for rework and Type II error of falsely not screening out a proportion of defects, thus selling those to customers which results in defect sales returns. The screened and returned items are then reworked and the proportion that could not be reworked successfully is scrapped. Shortages are allowed and are completely backlogged. Finally, we calculate the optimal production lot size and the optimal backordering quantity in order to minimize the total inventory cost per unit time. A numerical example is also considered to exemplify the obtained theoretical results which is followed by the complete sensitivity analysis of the involved parameters for even better managerial insights.

Keywords: EPQ; deteriorating items; imperfect quality; types I and II inspection errors; rework; sales return; scrapping; complete backorders (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S0219198920400113

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