Optimal replenishment policy for imperfect quality EMQ model with rework and backlogging

This paper derives the optimal replenishment policy for imperfect quality economic manufacturing quantity (EMQ) model with rework and backlogging. The classic EMQ model assumes that all items produced are of perfect quality. However, in real‐life manufacturing settings, generation of imperfect quality items is almost inevitable. In this study, a random defective rate is assumed. All items produced are inspected and the defective items are classified as scrap and repairable. A rework process is involved in each production run when regular manufacturing process ends, and a rate of failure in repair is also assumed. Unit disposal cost and unit repairing and holding costs are included in our mathematical modelling and analysis. The renewal reward theorem is employed in this study to cope with the variable cycle length. The optimal replenishment policy in terms of lot‐size and backlogging level that minimizes expected overall costs for the proposed imperfect quality EMQ model is derived. Special cases of the model are identified and discussed. Numerical example is provided to demonstrate its practical usage. Copyright © 2006 John Wiley & Sons, Ltd.