Developing a Multi-Product Economic Order Quantity Model with Necessary Simultaneous Orders for Imperfect Quality Items

The classic model of economic order quantity was introduced several decades ago to reduce inventory costs in companies and has since been widely used in various areas of inventory control. In recent years, researchers have developed various aspects of the EOQ model; Because the classic EOQ model does not take into account many important parameters in the real world. The purpose of this paper is to develop a classic EOQ model in order to operationalize and realize the assumptions in the space of simultaneous orders with imperfect quality items.

In this research, a mathematical modeling is developed for the imperfect inventory system as well as the simultaneous ordering requirement. Finally, a numerical example is provided along with the analysis of the results.

The results show that changing the screening rate can have a significant effect on reducing or increasing costs. This cost effect is due to the cost of maintaining items of poor quality until the end of the inspection period. The faster the screening operation and the faster the defective items are removed from the system, the lower the cost.

Originality/Value: 

In classic models, it is assumed that items of appropriate quality are ordered. In fact, due to the unstable quality of the production process, improper transportation, corruption or other factors, the presence of defective items is inevitable. In the proposed EOQ inventory system, these items are separated by 100% inspection of the consignment, and then these isolated items are sold in a package at a discounted price. Also, in order to reduce the fixed costs of ordering and shipping, the policy of simultaneous ordering has been used for all product categories, which has a high efficiency in reducing costs.