ABSTRACT The Economic Production Quantity (EPQ) model is commonly used by practitioners in the fields of production and inventory management to assist them in making decision on production lot size. The common assumptions in this model are that all units produced are perfect and shortages are not allowed. But, in real situation the defective items will be produced in each cycle of production and shortages and scrap are possible. These assumptions will underestimate the actual required quantity. Hence, the defective items can not be ignored in the production process. Rework process is necessary to convert those defective into finished goods. This study proposes EPQ model that incorporates both imperfect production quality and falsely not screening out a proportion of defects, thereby passing them on to customers, resulting in defect sales returns. To active this objective a suitable mathematical model is developed and the optimal production lot size which minimizes the total cost is derived. An illustrative example is provided and numerically verified. The validation of result in this model was coded in Microsoft Visual Basic 6.0.
Cite this paper
C. Krishnamoorthi and S. Panayappan, "An EPQ Model with Imperfect Production Systems with Rework of Regular Production and Sales Return," American Journal of Operations Research, Vol. 2 No. 2, 2012, pp. 225-234. doi: 10.4236/ajor.2012.22026.
 T. Gupta and S. Chakraborty, “Looping in a Multistage Production System,” International Journal of Production Research, Vol. 22, No. 2, 1984, pp. 299-311.
 M. J. Rosenblatt and H. L. Lee, “Economic Production Cycles with Imperfect Production Processes,” IIE Transactions, Vol. 8, No. 1, 1986, pp. 48-55.
 S. H. Yoo, D. Kim and M. S. Park, “Economic Production Quantity Model with Imperfect Quality Items, Two Way Imperfect Inspection and Sales Return,” International Journal of Production Economics, Vol. 121, 2009, pp. 255-265.
 A. K. Maity, K. Maity and M. Maity, “Optimal Remanufacturing Control Policy with Defective Item,” International Journal of Operation Research, Vol. 6, No. 4, 2009, pp. 500-518. doi:10.1504/IJOR.2009.027155
 N. H. Shah, A. S. Gor and C. Jhaveri, “Joint Optimal Production Inventory Model with Imperfect Production Processes and Varying Deterioration Rate in Buoyant Market,” International Journal of Operational Research, Vol. 9, No. 2, 2010, pp. 125-140.
 C. Mahata, et al., “The Optimal Cycle Time for EPQ Inventory Model of Deteriorating Items under Trade Credit Financing in the Fuzzy Sense,” International Journal of Operations Research, Vol. 7, No. 1, 2010, pp. 26-40.
 S. K. Manna and C. Chiang, “Economic Production Quantity Models for Deteriorating Items with Ramp Type Demand,” International Journal of Operational Research, Vol. 7, No. 4, 2010, pp. 429-444.
 B. Sarkar, S. S. Sana and K. Chaudhuri, “An Economic Production Quantity Model with Stochastic Demand in an Imperfect Production System,” International Journal of Services and Operations Management, Vol. 9, No. 3, 2011, pp. 259-283. doi:10.1504/IJSOM.2011.041100
 K. Srinivasa Rao, S. V. Uma Maheswara Rao and K. Venkata Subbaiah, “Production Inventory Models for Deteriorating Items with Production Quantity Dependent Demand and Weibull Decay,” International Journal of Operational Research, Vol. 11, No. 1, 2011, pp. 31-53.