Effects of Imperfect Quality and Defective Items on Economic Production Lot Size

The classical EPQ model has been used for a long ti me and is widely accepted and implemented. Nevertheless, the analysis for finding an economic lot size has based on a number of unrealistic assumptions. A common unrealistic assumption in using EPQ is that all units produced are of good quali ty. The classical EPQ model shows that the optimal lot size will generate minimum ma nufacturing cost, thus producing minimum setup cost and inventory cost. However, this is only true if all products manufactured...