An EOQ model for items with acceptable defective part and shortages

Abstract

This paper investigates an EOQ model for items with imperfect quality and shortages backordered. It is assumed that the defective items of each lot are screened out by a 100% inspection process and then can be sold in a single batch by the end of the inspection process and that a portion of the defectives (called the acceptable defective part) can be utilized as perfect quality and hence affect the consumption of the remaining perfect quality items after the defectives are sold. By maximizing the expected profit per unit time, the optimal order quantity and the maximum backorder level are determined for the defective percentage being random. Besides, two properties of the optimal order quantity, the maximum backorder level, and the corresponding profit per unit time, are also given. Finally, a numerical example is provided to illustrate the proposed model.

Keywords:

• EOQ
• imperfect quality
• acceptable defective part
• shortages

Acknowledgments

This work was partially supported by the National Science Council of R.O.C. (Contract No. NSC-100-2410-H-151-009-).