Abstract
Economic order quantity model and production quantity model assume that production processes are error free. However, variations exist in processes which result in imperfection particularly in high machining environments. Processes variations result in nonconformities that increase quality costs in the form of rework, rejects and quality control techniques implementations to ensure quality product delivery. This paper is an attempt towards development of inventory model which incorporate inspection, rework, and rejection (IRR) quality costs in optimum lot size calculation focusing work in process inventory. Mathematical model is derived for optimum lot size based on minimum average cost function using analytical approach. This new developed model (GTOQIRR) assume an imperfect production environment. Numerical examples are used to visualize the significant effect of quality cost in the proposed model in comparison to the previously developed models. The proposed model is highly recommendable for quality based high machining manufacturing environments considering work in process inventories.