Economic production quantity models for imperfect items with pollution costs

Abstract

Government regulations, environmental taxes, media and growing environmental concern among customers have created a need for ecofriendly and economic manufacturing system. Since imperfect products are unavoidable due to faulty production, transport and storage conditions, they must be screened out before delivery to the customer through a 100% screening process which produces reworkable, non-reworkable but slightly defective items and scrap items beside the major perfect items. In manufacturing scenarios the pollutants are the harmful byproducts. Sometimes a small fraction of pollutant remains uncaptured or leaked from the cumulated pollutants. Keeping all these facts in mind, we propose a economic production quantity model with three types of imperfect items as random fractions of production lot-size under two different scenarios namely constant and variable pollution cost. We have illustrated our model by numerical example and sensitivity analysis is also carried out. We have shown that our model can also be used for cap-and-trade policy.