Effect of repair cost on the rework decision-making in an economic production quantity model

Abstract

This paper studies effects of repair cost on the rework decision-making in an imperfect quality Economic Production Quantity (EPQ) model. The optimal lot sizes and the expected annual inventory costs for the cases of EPQ model with a rework process and without any reworking of defective items are compared and analyzed. With straightforward numerical derivations, this note proposes a set of mathematical equations to assist in determining on whether it is beneficial or not to rework. Sensitivity analysis and numerical example are provided to demonstrate their practical usages.

Keywords:

• Manufacturing
• production
• rework-or-scrap
• EPQ
• defective rate