An economic order quantity model with defective items and shortages

The fundamental assumption of an economic order quantity (EOQ) model is that 100% of items in an ordered lot are perfect. This assumption is not always pertinent for production processes because of process deterioration or other factors. This paper develops an EOQ model for that each ordered lot contains some defective items and shortages backordered. It is assumed that 100% of each lot are screened to separate good and defective items which are collection of imperfect quality and scrap items. The effect of percentage defective on optimal solution is studied while numerical examples are provided for the developed model.