Effects of imperfect products on lot sizing with work in process inventory

The economic production quantity (EPQ) is one of the most widely known inventory control models that can be regarded as the generalized form of the Economic Order Quantity. However, the model is built on an unrealistic assumption that all the produced items need to be of perfect quality. Also, the introduction of work in process, WIP, as part of the inventory has been of lesser concern in developing inventory models. This paper attempts to develop the economic production quantity considering work in process inventory and manufacturing imperfect products that may be either reworkable or non-reworkable. The non-reworkable imperfect products are sold at a reduced price. This paper introduces a new model for this problem.