An economic order quantity (EOQ) for items with imperfect quality and inspection errors

An approach similar to Salameh and Jaber (2000) has been used in this paper to produce an optimal production/order quantity that takes care of imperfect processes. An imperfect inspection process (Raouf et al., 1983) is utilized to describe the defective proportion of the received lot. That is, the inspector may commit errors while screening. The probability of misclassification errors is assumed to be known. The inspection process would consist of three costs: (a) cost of inspection (b) cost of Type I errors and (c) cost of Type II errors. The defective items, classified by the inspector and the buyer would be salvaged as a single batch that is sold at a lower price. A mathematical model is developed to depict this scenario. Numerical examples are provided to illustrate the solution procedure.