Lotsizing in a Production System with Rework and Product Deterioration

Producing new or recovering defective products often takes place on a common facility, with these activities carried out in lots. Consequently, there is a necessity to coordinate the production and rework activities with respect to the timing of operations and also with regard to appropriate lot sizes for both processes while completely satisfying a given demand. Thereby, it has to be taken into account whether the state of defective items that await rework worsens in the course of time or not. In this paper we present an EPQ model which addresses all of these aspects. Considering set-up and inventory holding costs, optimization algorithms are developed covering different planning situations.