Abstract
In the classical inventory model, the issue of quality of the product is not considered. It is assumed that all the items procured are of perfect quality. However, in real life production environment it is observed that some of the items produced are defective. Here, we have considered an Economic Order Quantity (EOQ) model with imperfect quality items where the incoming lot has fractions of scrap and re-workable items. These fractions are considered to be known with a certain given percentage. The demand from customers end is met with the perfect and re-worked items and the scrap items are sold differently at a salvage cost in a secondary market. Also to represent the real life situations, the inventory parameters have been taken as interval numbers. The corresponding mathematical problem has been formulated as an un-constrained optimization problem and has been solved using Particle Swarm Optimization (PSO) technique. Finally, the model has been illustrated with a numerical example.