Optimizing replenishment policy in an EPQ-based inventory model with nonconforming items and breakdown

Singa Wang Chiu, Chung-Li Chou and Wen-Kuei Wu

Economic Modelling, 2013, vol. 35, issue C, 330-337

Abstract: The optimal replenishment policy for an economic production quantity (EPQ)-based inventory model with nonconforming items and breakdown is presented. A real-life production system inevitably generates nonconforming items and has equipment breakdowns owing to process deterioration or other uncontrollable factors. This study addressed these issues in an EPQ-based system to optimize a replenishment policy that minimizes the long-run average cost for the proposed system. Whenever a breakdown occurs, the machine is assumed to immediately be under repair, and an abort/resume inventory control policy is adopted. Under this control policy production of the interrupted lot resumes immediately after the machine is fixed and restored. A mathematical model and a recursive algorithm were used to derive the optimal replenishment policy. A numerical example was used to demonstrate the practical application and better cost efficiency of the proposed policy compared to a breakdown that occurs under a no-resumption policy.

Keywords: Economic production quantity; Replenishment policy; Machine breakdown; Abort/resume policy; Optimization; Imperfect EPQ model (search for similar items in EconPapers)
JEL-codes: C02 C44 C61 M11 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:35:y:2013:i:c:p:330-337

DOI: 10.1016/j.econmod.2013.07.004

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