4.7 Article

Optimal reorder level and lot size decisions for an inventory system with defective items

Journal

APPLIED MATHEMATICAL MODELLING
Volume 92, Issue -, Pages 651-668

Publisher

ELSEVIER SCIENCE INC
DOI: 10.1016/j.apm.2020.11.025

Keywords

Defective items; Imperfect quality; Inspection; EOQ; Newsboy

Ask authors/readers for more resources

This paper explores the use of an (r, Q) stock policy to manage an inventory system with deterministic demand and defective items. A new reorder level is proposed to prevent shortages and minimize total costs. Theoretical results demonstrate significant cost reduction and probability of shortages compared to other existing models.
In this paper an (r, Q) stock policy is used to control an inventory system with deterministic demand and defective items. The fraction of defective items in a batch is a random variable whose variance maybe dependent and independent of the order quantity. Considering the numerous benefits of selling high quality items (noting the vital importance for firms like medical device companies), a full inspection of the order quantity is conducted. Although full inspection reduces returns, ensures high quality products and improves customer satisfaction, it requires a substantial inspection time. Consequently, during this time a non-zero probability of undesirable (unplanned) shortages exists. The dominant suggestion in the literature, is to set the reorder level equal to the total demand during inpection period. This paper suggests an alternative reorder level to prevent shortages during this period and to formulate the backlogging cost in the case that unplanned shortages are permitted. Then, theoretical results ensure the determination of the reorder level and the order quantity that minimize the average total cost of the inventory system. Comparisons, through numerical examples and simulation, demonstrate that the proposed model leads to significant reduction both in cost and probability of shortages (if allowed), in relation to other existing models. (c) 2020 Elsevier Inc. All rights reserved.

Authors

I am an author on this paper
Click your name to claim this paper and add it to your profile.

Reviews

Primary Rating

4.7
Not enough ratings

Secondary Ratings

Novelty
-
Significance
-
Scientific rigor
-
Rate this paper

Recommended

No Data Available
No Data Available