A forecasting system by considering product reliability, POQ policy, and periodic demand

This paper presents an economic production quantity (EPQ) model with a periodic order quantity (POQ) policy, product reliability and periodic demand. The machine reliability has decreased over time; therefore, the rates of perfect and defective products reduce and increase over time, respectively. A fixed percentage of these products are reworked while the rest is wasted. Some equipment in their early days operates with excellent efficiency, but its performance deteriorates over time; therefore, operating costs increase. It is assumed the machine is inspected and repaired at the end of each production cycle; then, the machine returns to its original state. The demand for the final products is discrete, periodic and constant for each period. We use the POQ policy to meet customers' demand. In POQ procedures, orders for replenishment occur at fixed intervals. A Mixed Integer Non-Linear Program (MINLP) model is suggested. Then, a computational experiment is presented to discuss the optimally of the profit function. By analyzing the data, it is found that under different conditions, the manufacturer can use either Single Setup Single Period (SSSP) or Single Setup Multi-Period (SSMP) policy.