Chapter 4

An Economic Production Quantity

model for defective items with
trapezoidal type demand Rate

4.1 Introduction

The EPQ model assumes that the company will produce its own quantity or the

parts which are going to be shipped to the company while they are being produced,
therefore the orders are available or received in an incremental manner while the prod­

ucts are being produced. In the modern world, computer controlled machines are used
to increase the productivity and quality of products. Such a manufacturing system can
be difficult to control owing to its complicated working system. A system breakdown
sometimes occurs resulting in the production of defective items. Given these facts, sev­

eral researchers and scientists from different sectors have considered models with the

flexible manufacturing system (FMS). FMS offers the prospect of eliminating many of
the weaknesses of the different approaches but possibly at the cost of many jobs. It

consists of small or medium sized automated production lines. The ultimate aim of

FMS design is to develop a manufacturing system that is extremely flexible in terms

of product and volume mix, and provides high quality and low cost .outputs.

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 In other word, any disruption in service delivery may lead to lose market share.
As a result, inventory management, production planning and scheduling play an im­

portant role especially for world class manufacturers. In manufacturing companies,

when products are internally manufactured instead of being obtained from an outside
vendor, the economic production quantity (EPQ) inventory model is frequently em­
ployed to calculate the optimal lot size minimizing the overall production/inventory
costs. One primary assumption with any EPQ inventory model is that the products
are manufactured perfectly and there is no need of a rework process. However, due

to process deterioration, one may end up having imperfect quality items. Therefore,
we may attempt to reduce the total production/inventory expenditures by repairing
the defective items. There are good examples of the rework processes: Printed Cir­
cuit Board Assembly (PCBA) manufacturing, metal components, and plastic injection
molding, just to name a few.

In the long run of a manufacturing process, the system undergoes out-of-control

state and the process begins to produce imperfect quality products. The production
of imperfect quality items depends on time and reliability parameter. These imperfect
items are reworked to restore to their original quality. Moreover, the development

cost that varies with reliability parameter of the manufacturing system is introduced
to reduce the percentage of imperfect quality items. The unit production cost is a

function of reliability parameter and production rate. The profit function is maximised
by using Euler-Lagrange method by considering different types of costs. The unit
production cost and development cost, which are functions of reliability parameter
vary with changes in technology and resources. This phenomenon was discussed by
Biswajit Sarkar et al. [1].

The production system may undergo ‘out-of-control’ state from ‘in-control’ state,

after a certain time that follows a probability density function. The density function

varies with reliability of the machinery system that may be controlled by new tech­

nologies, investing more costs. The defective items produced in ‘out-of-control’state

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are reworked at a cost just after the regular production time.

In this chapter, section 4.2 contains the problem description and we provide the
fundamental assumptions and the notations for the proposed model in section 4.3. In
section 4.4, a mathematical formulation is established for an EPQ model for maximizing
profits. Numerical examples are provided to illustrate the proposed model in section
4.5 and the sensitivity analysis of the optimal solution with respect to parameters of
the system is carried out in section 4.6. Finally, we present the conclusions in section
4.7.

4.2 Problem Description

In this chapter, the inventory model for defective items with trapezoidal type

demand rate is considered. This chapter develops a model to determine the optimal

product reliability and production rate, that achieves the biggest total integrated profit

for an imperfect manufacturing process and necessary and sufficient conditions for

optimality of the dynamic variables are given. The Euler-Lagrange method is used
to obtain optimal solutions for product reliability parameter and dynamic production
rate. Finally, numerical examples are presented to illustrate the proposed model.

4.3 Assumptions and Notations

The mathematical model in this chapter is developed on the basis of the following
assumptions and notations:

4.3.1 Assumptions

The following assumptions are used throughout this chapter.

1. The demand rate, D ( t ) , which is positive and is assumed to be a trapezoidal type

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