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Advances in Operations Research
Volume 2013, Article ID 795078, 8 pages
Research Article

An Inventory Model with Price and Quality Dependent Demand Where Some Items Produced Are Defective

BITS Pilani—Dubai Campus, Dubai International Academic City, P.O. Box 345055, Dubai, UAE

Received 24 January 2013; Revised 15 May 2013; Accepted 17 May 2013

Academic Editor: Ching-Jong Liao

Copyright © 2013 Tapan Kumar Datta. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


This paper analyzes an inventory system for joint determination of product quality and selling price where a fraction of items produced are defective. It is assumed that only a fraction of defective items can be repaired/reworked. The demand rate depends upon both the quality and the selling price of the product. The production rate, unit price, and carrying cost depend upon the quality of the items produced. Quality index is used to determine the quality of the product. An algorithm is provided to solve the model with given values of model parameters. Sensitivity analysis has also been performed.