A vendor-constrained economic production quantity model integrating scrap recovery under sustainability

Abstract

Growing environmental and financial challenges emphasize the importance of incorporating sustainability into production inventory systems, particularly in areas where waste generation and scrap removal highly contribute to ecological impact and operational expenses. This study proposes a sustainable Economic Production Quantity model by incorporating a dual mechanism of scrap recovery and vendor side capacity limitations. The model is formulated under two scenarios: (i) an economic production quantity model with faulty items and fixed scrap disposal and (ii) a sustainable model incorporating Waste to Energy recovery, excessive fines, and managing system level expenses. An analytical cost formulation is developed and evaluated using closed form expressions. The results confirm that Model II is the best optimum method since the sustainable model reduces the overall annual cost from $71,702 to $71,566. This demonstrates that sustainability and financial efficiency can be simultaneously attained when operational constraints and recovery possibilities are systematically modelled.