Optimal inventory model in which the imperfect items will be repaired after the screening process

The aim of this paper is defining an optimal model for a retailer who uses a 100% screening process to reveal defective items which are received from the supplier. The demand rate is lower than the screening rate and the defective items will be sent to a repairing shop to be repaired. According to the fixing rate, the products will be sent back to the retailer after a while. During the fixing process the retailer may face shortages. The goal is finding the ordering amount to maximize the retailer s profit during the planning horizon. The mathematical model will be described and renewal-reward theorem will be used to solve the proposed model considering a numerical example.

Keywords:

Economic order quantity , screening process , repairing process , shortage