Optimal lot size of EPQ model considering imperfect and defective products

The economic production quantity (EPQ) is a commonly used inventory model. An assumption in the EPQ model is that all units produced are perfect. Some researchers have studied the effects after relaxing this assumption on the inventory models. The objective of this paper is to determine the economic production quantity with reduced pricing, rework and reject situations in a single-stage system in which rework takes place in each cycle after processing to minimize total system costs. The assumption entertained in this paper is that processing leads to different products classified in the four groups of perfect products, imperfect products, defective but reworkable products, and, finally, non-reworkable defective products. The percentage of each type is assumed to be constant and deterministic. A mathematical model is developed and numerical examples are presented to illustrate the usefulness of this model compared to previous ones.