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An EOQ model with backorders and rejection of defective supply batches

Author

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  • Skouri, K.
  • Konstantaras, I.
  • Lagodimos, A.G.
  • Papachristos, S.

Abstract

We consider a single-echelon inventory installation under the classical EOQ (with backorders) paradigm to study the effects of supply quality on cost performance. Previous research on imperfect supply quality has focused on variants of the proportional (deterministic or random) yield problem, where supply batches are all accepted and then used, after screening any defects. In this paper we study an alternative setting where, entire supply batches may be defective (below quality standards) and therefore rejected on arrival. Note that such supply flow disruptions are analogous to those considered within the economic order quantity with disruptions (EOQD) area of research. We first present an exact model for the system expected cost and show its convexity. Optimal cost and respective values of the decision variables (i.e. planned order quantity and backorders) are then obtained in a closed form. Interestingly, under perfect supply quality, all expressions reduce to those of classical EOQ. Analytical and computational results reveal the serious impact of inferior supply quality on system cost as well as the sensitivity of the system parameters.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:proeco:v:155:y:2014:i:c:p:148-154
    DOI: 10.1016/j.ijpe.2013.11.017
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    References listed on IDEAS

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    Cited by:

    1. Taleizadeh, Ata Allah & Khanbaglo, Mahboobeh Perak Sari & Cárdenas-Barrón, Leopoldo Eduardo, 2016. "An EOQ inventory model with partial backordering and reparation of imperfect products," International Journal of Production Economics, Elsevier, vol. 182(C), pages 418-434.
    2. Snyder, Lawrence V., 2014. "A tight approximation for an EOQ model with supply disruptions," International Journal of Production Economics, Elsevier, vol. 155(C), pages 91-108.
    3. Pasandideh, Seyed Hamid Reza & Niaki, Seyed Taghi Akhavan & Nobil, Amir Hossein & Cárdenas-Barrón, Leopoldo Eduardo, 2015. "A multiproduct single machine economic production quantity model for an imperfect production system under warehouse construction cost," International Journal of Production Economics, Elsevier, vol. 169(C), pages 203-214.

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