Economic production quantity model with imperfect-quality items, two-way imperfect inspection and sales return |
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Authors: | Seung Ho Yoo DaeSoo Kim Myung-Sub Park |
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Affiliation: | aSeoul Women's University, Gongneung 2-dong, Nowon-gu, Seoul 139-774, Republic of Korea;bKorea University, Business School, Anam-dong, Seongbuk-gu, Seoul 136-701, Republic of Korea |
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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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Keywords: | Inventory Imperfect quality Inspection error Defect return Rework and salvage |
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