An economic order quantity model for deteriorating items with partially permissible delay in payments linked to order quantity. (English) Zbl 1154.90309

Ouyang, Liang-Yuh; Teng, Jinn-Tsair; Goyal, Suresh Kumar; Yang, Chih-Te

Eur. J. Oper. Res. 194, No. 2, 418-431 (2009).

Summary: To attract more sales suppliers frequently offer a permissible delay in payments if the retailer orders more than or equal to a predetermined quantity \(W\). In this paper, we generalize [S. K. Goyal, J. Oper. Res. Soc. 36, 335–339 (1985; Zbl 0568.90025)] economic order quantity (EOQ) model with permissible delay in payment to reflect the following real-world situations: (1) the retailer’s selling price per unit is significantly higher than unit purchase price, (2) the interest rate charged by a bank is not necessarily higher than the retailer’s investment return rate, (3) many items such as fruits and vegetables deteriorate continuously, and (4) the supplier may offer a partial permissible delay in payments even if the order quantity is less than \(W\). We then establish the proper mathematical model, and derive several theoretical results to determine the optimal solution under various situations and use two approaches to solve this complex inventory problem. Finally, a numerical example is given to illustrate the theoretical results.

MSC:

90B05	Inventory, storage, reservoirs
91B28	Finance etc. (MSC2000)

Keywords:

inventory; EOQ; trade credits; partially permissible delay in payment; finance

Citations:

Zbl 0568.90025

References:

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