Optimal Production Decisions for Deteriorating Items with Investment on Production Processes

Abstract

The imperfect production processes always leads to imperfect products and decreases the profit of business. Improving the production processes by increasing the investment cost will decrease the defective percentage of the items. In this study, we develop an EPQ model of deteriorating items with investment on imperfect production processes. An algorithm is developed to derive a replenishment policy such that the expected unit time profit is maximized. Numerical examples are provided to illustrate the theory.