Numerical method for determination of reworking or scraping the defective items in a finite production rate model

This paper presents a numerical method for determination of reworking or scraping defective items in a finite production rate model with backlogging permitted. In most practical manufacturing settings, due to process deterioration or other factors, generation of defective items is inevitable. The defective items can either be repaired or be discarded. In the finite production model we studied, the defective rate is assumed to be a random variable and the rework process can start immediately when regular production ends. The optimal lot sizes and the expected annual inventory costs for the cases of production systems with the rework process and without the rework process are compared and analysed. A set of numerical equations are developed to assist in determining on whether or not it is beneficial to rework defective items. A numerical example is provided to demonstrate their practical usages.