A STUDY ON THE EFFECT OF INFLATION AND TIME VALUE OF MONEY ON LOT SIZING IN SPITE OF REWORKING IN AN INVENTORY CONTROL MODEL

Original scientific paper Non production of defective parts during production operations and non-attention to inflation and time value of money are among the hypotheses of economic production quantity model. But the performed studies show that considering defective parts in production size determination models or including the subject of inflation and time value of money in them leads to the change of optimal quantity of production class. Therefore, in production systems with defective parts production, it is necessary to consider these two factors in order to determine production class size. This article studies the effect of time value of money on economic production quantity model in spite of repetition. Due to the complexity of cost function, it is not possible to find an optimal answer easily; therefore, this article uses an algorithm based on combination of two search methods, accelerating and Dico Thomas, in order to solve the problem. Finally, sensitivity analysis has been done on the basis of interest rate, inflation rate and joint rate. Numerical calculation shows that failure to consider inflation and time value of money causes relatively high error in cost