The integrated economic production quantity model for inventory and quality

Determining the optimal production lot sizing has been widely used by the classical economic production quantity (EPQ) model. However, the analysis for finding an EPQ has several weaknesses which lead many researchers to make extensions in several aspects on the original EPQ model. The cost of quality is one of good aspects to be added to the EPQ model since there are a lot of costs incurred such as prevention, appraisal, failure, warranty, inspection, and rework costs. This paper deals with the finite production inventory model integrated with quality costs for a single product imperfect manufacturing system. The defect rate is considered as random variable with a known proportion, and defective items are reworked at some costs either before or after sales (warranty). The prevention, appraisal, and inspection costs have somewhat inverse relationships to the defective rate. The replacement rate from warranty is also considered to be another variable with known the failure rate.; The objective of this research is to develop mathematical models in order to minimize the expected total cost of inventory and quality related model. Moreover, we determine the best quality and ordering quantity policies based on the total system cost.