An Economic Production Quantity Model for Defective Items with Sales Return Service, Scrap Items and Rework

In this model, we establish an inventory model to determine the optimal inventory replenishment scheme for the economic production quantity (EPQ) model for imperfect, deteriorating items with sales return service under multiple production and rework setup. In one cycle, production process can produces the products in m production setups and reworks the defective items in one rework setup. The common assumptions in this model are that all units produced are not perfect and shortages are not allowed. The defective/scrap items are produced during the m production setups. The defective items are of two types which are recoverable items and irrecoverable items. The recoverable items are converted into good quality items in rework process and irrecoverable items are considered as scrap (disposable) items. A portion of defective items produced are not successfully screened out internally during the m production setups and passed on to customer, thereby causing defect sales returns and reverse logistic from customers back to the manufacturer. The proposed model is demonstrated numerically and the sensitivity analysis is also carried out to study the behavior of the inventory model.