Economic production quantity (EPQ) model for three type imperfect items with rework and learning in setup

Imperfect quality items are unavoidable in an inventory system due to imperfect production process, natural disasters, damages, or many other reasons. The setup cost and production cycle time can be related in terms of process deterioration and learning and forgetting effects. Learning reduces production run length and setup cost, whereas deterioration and forgetting increases both. Keeping these facts in mind, this paper investigates an Economic Production Quantity (EPQ) model with imperfect quality items with varying set-up costs. Mathematical model and solution procedures are developed with major insight to its characteristics. Numerical example and sensitivity analysis are provided to illustrate and analyze the model performance. It can be observed that our model has a significant impacts on the optimal lot size and optimal profit of the model.