INVENTORY AND PRICING DECISIONS FOR AN IMPERFECT PRODUCTION SYSTEM WITH QUALITY INSPECTION, REWORK AND CARBON-EMISSIONS

Abstract

The present paper considers the effect of imperfect quality items on a production system which further undergoes inspections and reworks. The demand for the product is price reliant. Two situations to handle the imperfect items are analyzed: selling them at a reduced price and reworking them. The demand is assumed to meet with perfect products in either case. Further, the study incorporates the carbon-emissions borne during the production of goods and their holding in the inventory system. The model aims at maximizing the prot function by jointly optimizing mark-up price and production quantity. To demonstrate model characteristics, numerical and sensitivity analysis are also presented.