An EPQ model for an imperfect production system with rework, scrap and backorder

This paper deals with an imperfect two-stage manufacturing process that orders raw materials from a supplier and produces finished goods with defective items that can be reworked. The generation of scrap during the initial production stage, during inspection, and during the rework stage is also considered. To fulfil customer demand a permissible backorder is also considered. First, an inventory model is developed for this two-stage production process with instantaneous raw material order, in-cycle rework, and scrap. Then, a total cost function is developed to simultaneously find the optimal economic production quantity, optimal backorder quantity, and optimal order quantity. The cost function of the proposed inventory model is verified and validated using numerical examples and sensitivity analysis. © 2021 Inderscience Enterprises Ltd.. All rights reserved.