EPQ model under imperfect production process with customer return and partial backlogging
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Abstract
In the proposed paper, an imperfect production model is developed by considering the management of inventory
at two different stages. In the first stage, we consider raw material inventory management while in the second
stage inventory management for the finished goods is considered. The total cost for both systems is optimized
together. For the raw material inventory, demand depends on the discount rate offered by the suppliers while the
demand for finished goods depends on the selling price of goods. Different deterioration rates are considered
for the inventories in different stages. The production rate of finished goods depends on demand. Partial
backlogging and shortages are also considered. Customer return rate is considered as the function of selling
price and demand. The whole of the study is carried out under the effect of inflation. A numerical example and
sensitivity analysis have been done in the paper to show the practical utility of the model. A convexity graph of
the total cost function is also included in the paper to show the behavior of the total cost function.
Keywords:
Imperfect production, deterioration, shortage, partial backlogging, inflationMathematics Subject Classification:
Mathematics- Pages: 648-654
- Date Published: 01-01-2021
- Vol. 9 No. 01 (2021): Malaya Journal of Matematik (MJM)
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