Incorporating multi-delivery policy and quality assurance into economic production lot size problem

Abstract

This paper incorporates a multi-delivery policy and quality assurance into an imperfect economic production quantity (EPQ) model with scrap and rework. A portion of nonconforming items produced is considered to be scrap, while other is assumed to be repairable and is reworked in each cycle when regular production ends. Finished items can only be delivered to customers if whole lot is quality assured after rework. Fixed quantity multiple installments of finished batch are delivered by request to customers at a fixed interval of time. Expected integrated cost function per unit time is derived. A closed-form optimal batch size solution to the problem is obtained. Two special cases are examined and a numerical example given to demonstrate model’s practical usage.