Abstract: In the existing economic production quantity (EPQ) models, there are unrealistic assumptions such that it is not applicable in practice. To overcome this drawback, the problem of EPQ is studied by using the activitybased costing method. In considering repairable imperfect items under the storage capacity limitation, an inventory cost control model is developed with fuzzy parameters. Then, the optimal production quantity and shortage quantity are found. An example is given to illustrate the feasibility and effectiveness of the proposed method.