An Economic Order Quantity (EOQ) Model for Items with Linear Demand, Imperfect Quality and Inspection Errors

Abstract

In practice, when a lot size of stock is received, an inspection process is necessary to identify the defective items. In addition, the inspection process itself is not error-free and it may contain misclassification errors. In this paper, an economic order quantity model for imperfect quality items under screening errors is studied where the demand is assumed to be linearly dependent on time. It is also assumed in this paper that shortages are not allowed. The best cycle length which optimizes the total profit is obtained.  For applicability of the developed model, a numerical example is illustrated and sensitivity analysis was carried out to show the effect on some of the system parameters (i.e. demand, holding cost, screening rate and selling price) on the total variable cost.