Economic lot scheduling problem under two different rework policies

At the end of the 20th century, inventory problems involving defective items have been relevant to production systems research. This paper provides an economic lot scheduling problem (ELSP) for a defective manufacturing system with scrap and reworked items involving multiple products, and two separate policies to handle the defective items. The defective items will be reworked and converted into useful items. In the first policy, all defective items are deposited in a warehouse until all production periods are completed, and then, after n production cycles, a separate rework process is implemented. In the second policy, all reworkable items are repaired in the same production cycle, i.e., as soon as the production phase concludes, the rework process starts immediately. Finally, each problem is solved using a closed-form approach, employing the derivative method for solution, and a sensitivity analysis is performed. Both policies are compared, and some managerial insights are presented to identify which one is better and why.