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Math. Comput. Appl. 2006, 11(1), 75-84; doi:10.3390/mca11010075

Solving an EPQ Model with Rework and Service Level Constraint

1
Department of Industrial Engineering and Management, Chaoyang University of Technology, Taichung, Taiwan
2
Department of Business Administration, Chaoyang University of Technology, Taichung 413, Taiwan
3
Department of Industrial Engineering and Management, Chaoyang University of Technology, Taichung, Taiwan
*
Author to whom correspondence should be addressed.
Published: 1 April 2006
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Abstract

This paper examines an economic production quantity (EPQ) model with rework and service level constraint. First, we prove that the expected overall costs for an imperfect EPQ model with backlogging permitted is less than or equal to that of the one without backlogging. Secondly, the relationship between “imputed backorder cost” and maximal shortage level is derived for decision-making on whether the required service level is achievable. Then an equation for calculating the intangible backorder cost is proposed for situation when the required service level is not attainable. By including this intangible backorder cost in mathematical analysis, one can derive a new optimal lot-size policy that minimizes expected total costs as well as satisfies the maximal shortage level constraint for the EPQ model with rework. Numerical example is provided to demonstrate its practical usage.
Keywords: Manufacturing; Economic production quantity; Service level constraint; Reworking Manufacturing; Economic production quantity; Service level constraint; Reworking
This is an open access article distributed under the Creative Commons Attribution License (CC BY 3.0).

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MDPI and ACS Style

Chiu, Y.-S.P.; Chiu, S.W.; Lin, H.-D. Solving an EPQ Model with Rework and Service Level Constraint. Math. Comput. Appl. 2006, 11, 75-84.

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Math. Comput. Appl. EISSN 2297-8747 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
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