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Disaggregation and consolidation of imperfect quality shipments in an extended EPQ model

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  • Yassine, Ali
  • Maddah, Bacel
  • Salameh, Moueen

Abstract

We consider a standard economic production quantity (EPQ) model. Due to manufacturing variability, a fraction P of the produced inventory will have imperfect quality, where P is a random variable with a known distribution. We consider a 100% inspection policy and further assume that the inspection rate is larger than that of production. Thus, all imperfect quality items will be detected by the end of the production cycle. For such an augmented EPQ model, we first derive the new optimal production quantity assuming that the imperfect quality items are salvaged once at the end of every production cycle. Then, we extend this base model to allow for disaggregating the shipments of imperfect quality items during a single production run. Finally, we consider aggregating (or consolidating) the shipments of imperfect items over multiple production runs. Under both scenarios we derive closed-form expressions for both the economic production quantity and the batching policy, and show that our desegregation/consolidation schemes can lead to significant cost savings over the base model.

Suggested Citation

  • Yassine, Ali & Maddah, Bacel & Salameh, Moueen, 2012. "Disaggregation and consolidation of imperfect quality shipments in an extended EPQ model," International Journal of Production Economics, Elsevier, vol. 135(1), pages 345-352.
    • Handle: RePEc:eee:proeco:v:135:y:2012:i:1:p:345-352
    DOI: 10.1016/j.ijpe.2011.08.010
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    References listed on IDEAS

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    Cited by:

    1. Chang, Hung-Chi, 2013. "An economic production quantity model with consolidating shipments of imperfect quality items: A note," International Journal of Production Economics, Elsevier, vol. 144(2), pages 507-509.
    2. Soheyl Khalilpourazari & Seyed Hamid Reza Pasandideh, 2020. "Multi-objective optimization of multi-item EOQ model with partial backordering and defective batches and stochastic constraints using MOWCA and MOGWO," Operational Research, Springer, vol. 20(3), pages 1729-1761, September.
    3. Leung, Lawrence C. & Wong, Wai Hung & Hui, Yer Van & Wan, Yulai, 2013. "Managing third-party logistics under uncertainty: A decision scheme and managerial implications," International Journal of Production Economics, Elsevier, vol. 145(2), pages 630-644.
    4. Skouri, K. & Konstantaras, I. & Lagodimos, A.G. & Papachristos, S., 2014. "An EOQ model with backorders and rejection of defective supply batches," International Journal of Production Economics, Elsevier, vol. 155(C), pages 148-154.
    5. Widyadana, Gede Agus & Wee, Hui Ming, 2012. "An economic production quantity model for deteriorating items with multiple production setups and rework," International Journal of Production Economics, Elsevier, vol. 138(1), pages 62-67.
    6. Jaber, Mohamad Y. & Zanoni, Simone & Zavanella, Lucio E., 2014. "Economic order quantity models for imperfect items with buy and repair options," International Journal of Production Economics, Elsevier, vol. 155(C), pages 126-131.

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