Optimal Replenishment Cycle in an EOQ Model with Defective Items

The optimal order cycle is very important in production decision, especially in the process of continuous production. In this paper, we try to determine the optimal replenishment cycle in an EOQ model for defective items. In the proposed model, the defective rate of products is a random variable and the order cycle is determined by the expected defective rate, order quantity and demand rate. Two possibilities of residual or shortage at the end of the cycle are considered. The optimal replenishment and the order quantity are determined by maximizing the expected profit as the objective. The validity of the model is verified through the simulation experiments. Sensitivity analysis of the main parameters is presented.