An economic production quantity (EPQ) model with rework process and reworked items sold in secondary markets.

A sustainable inventory system aims to increase the quality of its production and reduce its impact on the environment without increasing its costs. This study presents an economic production quantity (EPQ) model with a rework process where the production of good quality items is used to fulfil primary market demand, whereas the reworked defective items are used to fulfil secondary market demand. There are five cases being observed during the simultaneous production process and reworking process, and a generalised model that minimises the total cost per unit time (TCUT) is developed. The proposed model is experimented with using a variety of numerical examples, and a numerical sensitivity analysis that studies how different system parameters affect costs is performed. This analysis suggests that the proposed model is fairly robust to changes in parameters; however, the higher the proportion of defective items in a production lot size, the more serious the impact on the optimal cost. The results show that the TCUT is increasing exponentially with respect to the proportion of defective items in a production lot size. [ABSTRACT FROM AUTHOR]