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Economic production quantity model with imperfect-quality items, two-way imperfect inspection and sales return

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  • Yoo, Seung Ho
  • Kim, DaeSoo
  • Park, Myung-Sub

Abstract

In practices, not only production but inspection processes are often not perfect, thereby generating defects and inspection errors. Previous imperfect-quality inventory studies, however, have mostly focused on developing cost-minimizing models that do not consider imperfect inspection processes and related defect sales return issues despite their practical significance. Thus, this study proposes a profit-maximizing economic production quantity model that incorporates both imperfect production quality and two-way imperfect inspection, i.e., Type I inspection error of falsely screening out a proportion of non-defects and disposing of them like defects and Type II inspection error of falsely not screening out a proportion of defects, thereby passing them on to customers, resulting in defect sales returns. We also consider rework and salvage in disposing of screened and returned items. Then we solve the model optimally and present numerical sensitivity analyses to provide important managerial insights into practices.

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  • Yoo, Seung Ho & Kim, DaeSoo & Park, Myung-Sub, 2009. "Economic production quantity model with imperfect-quality items, two-way imperfect inspection and sales return," International Journal of Production Economics, Elsevier, vol. 121(1), pages 255-265, September.
  • Handle: RePEc:eee:proeco:v:121:y:2009:i:1:p:255-265
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    3. Hsu, Jia-Tzer & Hsu, Lie-Fern, 2013. "An EOQ model with imperfect quality items, inspection errors, shortage backordering, and sales returns," International Journal of Production Economics, Elsevier, vol. 143(1), pages 162-170.
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    8. Leopoldo Eduardo Cárdenas-Barrón & María José Lea Plaza-Makowsky & María Alejandra Sevilla-Roca & José María Núñez-Baumert & Buddhadev Mandal, 2021. "An Inventory Model for Imperfect Quality Products with Rework, Distinct Holding Costs, and Nonlinear Demand Dependent on Price," Mathematics, MDPI, vol. 9(12), pages 1-20, June.
    9. Amalesh Kumar Manna & Leopoldo Eduardo Cárdenas-Barrón & Jayanta Kumar Dey & Shyamal Kumar Mondal & Ali Akbar Shaikh & Armando Céspedes-Mota & Gerardo Treviño-Garza, 2022. "A Fuzzy Imperfect Production Inventory Model Based on Fuzzy Differential and Fuzzy Integral Method," JRFM, MDPI, vol. 15(6), pages 1-19, May.
    10. Abu Hashan Md Mashud & Hui-Ming Wee & Chiao-Ven Huang & Jei-Zheng Wu, 2020. "Optimal Replenishment Policy for Deteriorating Products in a Newsboy Problem with Multiple Just-in-Time Deliveries," Mathematics, MDPI, vol. 8(11), pages 1-18, November.
    11. Johannes Freiesleben & Nicolas Gu'erin, 2015. "Homogenization and Clustering as a Non-Statistical Methodology to Assess Multi-Parametrical Chain Problems," Papers 1505.03874, arXiv.org, revised Dec 2017.
    12. Ata Allah Taleizadeh, 2018. "A constrained integrated imperfect manufacturing-inventory system with preventive maintenance and partial backordering," Annals of Operations Research, Springer, vol. 261(1), pages 303-337, February.
    13. Javad Asadkhani & Hadi Mokhtari & Saman Tahmasebpoor, 2022. "Optimal lot-sizing under learning effect in inspection errors with different types of imperfect quality items," Operational Research, Springer, vol. 22(3), pages 2631-2665, July.
    14. Liao, Gwo-Liang & Sheu, Shey-Huei, 2011. "Economic production quantity model for randomly failing production process with minimal repair and imperfect maintenance," International Journal of Production Economics, Elsevier, vol. 130(1), pages 118-124, March.
    15. Ouyang, Liang-Yuh & Chang, Chun-Tao, 2013. "Optimal production lot with imperfect production process under permissible delay in payments and complete backlogging," International Journal of Production Economics, Elsevier, vol. 144(2), pages 610-617.
    16. M. Masanta & B. C. Giri, 2022. "A closed-loop supply chain model with learning effect, random return and imperfect inspection under price- and quality-dependent demand," OPSEARCH, Springer;Operational Research Society of India, vol. 59(3), pages 1094-1115, September.
    17. Sraboni Mandal & Danish Ali Khan, 2015. "Integrated inventory model with uniform demand for one vendor one customer," International Journal of Business Performance and Supply Chain Modelling, Inderscience Enterprises Ltd, vol. 7(1), pages 36-52.
    18. Al-Salamah, Muhammad, 2019. "Economic production quantity in an imperfect manufacturing process with synchronous and asynchronous flexible rework rates," Operations Research Perspectives, Elsevier, vol. 6(C).
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    20. Guchhait, Partha & Kumar Maiti, Manas & Maiti, Manoranjan, 2013. "Production-inventory models for a damageable item with variable demands and inventory costs in an imperfect production process," International Journal of Production Economics, Elsevier, vol. 144(1), pages 180-188.
    21. Khan, M. & Jaber, M.Y. & Guiffrida, A.L. & Zolfaghari, S., 2011. "A review of the extensions of a modified EOQ model for imperfect quality items," International Journal of Production Economics, Elsevier, vol. 132(1), pages 1-12, July.
    22. Yoo, Seung Ho & Kim, DaeSoo & Park, Myung-Sub, 2012. "Lot sizing and quality investment with quality cost analyses for imperfect production and inspection processes with commercial return," International Journal of Production Economics, Elsevier, vol. 140(2), pages 922-933.
    23. Lee, Sunghee & Kim, Daeki, 2014. "An optimal policy for a single-vendor single-buyer integrated production–distribution model with both deteriorating and defective items," International Journal of Production Economics, Elsevier, vol. 147(PA), pages 161-170.
    24. Sudipta Sinha & Nikunja Mohan Modak & Shib Sankar Sana, 2020. "An entropic order quantity inventory model for quality assessment considering price sensitive demand," OPSEARCH, Springer;Operational Research Society of India, vol. 57(1), pages 88-103, March.

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