Optimal Economic Ordering Policy for Deteriorating Items under Two-level Trade Credit and Inflation

Abstract

In this paper, we develop an inventory model with delay in payments for deteriorating items. In our model, retailer who purchases the items enjoys a fixed credit period offered by his/her supplier and, in turn, also offers a credit period to his/her customers in order to promote the market competition. The demand is assumed to be linear function of the retailer's current-stock level. The effect of both inflation and time value of money are taken into account. The items start deteriorating from the moment they are put into the inventory. The mathematical model is developed and numerical example is presented to illustrate optimization

Keywords

References

[1] Goyal, S.K; Economic order quantity under conditions of permissible delay in payments, J. Oper. Res. Soc. 36, 335– 338, 1985.
[2] Chung, K.J; A theorem on the determination of economic order quantity under conditions of permissible delay in payments, Comput. Oper. Res. 25, 49–52, 1998.
[3] Aggarwal, S.P; Jaggi, C.K; Ordering policies of deteriorating items under permissible delay in payments, J. Oper. Res. Soc. 46, 658–662, 1995.
[4] Jamal, A.M.M; Sarker, B.R; Wang, S; An ordering policy for deteriorating items with allowable shortages and permissible delay in payment, J. Oper. Res.Soc. 48, 826–833, 1997.
[5] Jamal, A.M.M; Sarker, B.R; Wang, S; Supply chain model for perishable products under inflation and permissible delay in payment, Comput. Oper. Res.27, 59–75, 2000.
[6] Chang, C.T.; An EOQ model with deteriorating items under inflation when supplier credits linked to order quantity, Int. J. Prod. Econ. 88, 307–316, 2004.
[7] Chung, K.J; Huang, Y.F; The optimal cycle time for EPQ inventory model under permissible delay in payments, Int. J. Prod. Econ. 84, 307–318, 2003.
[8] Levin, R.I; Mclaughlin, C.P; Lamone, R.P; Kottas, J.F; Productions/Operations Management: Contemporary Policy for Managing Operating Systems, McGraw Hill, New York, 1972.
[9] Silver, E.A; Peterson, R; Decision Systems for Inventory Management and Production Planning, second ed., Wiley, New York, 1985.
[10] Liao, H.C; Tsai, C.H; Su, C.T; An inventory model with deteriorating items under inflation when a delay in payment is permissible, Int. J. Prod. Econ. 63, 207–214, 2000.
[11] Sana, S.S; Chaudhuri, K.S; A deterministic EOQ model with delays in payments and price-discount offers, Eur. J. Oper. Res. 184, 509–533, 2008.
[12] Soni, H; Shah, N.H; Optimal ordering policy for stock-dependent demand under progressive scheme, Eur. J. Oper. Res. 184, 91–100, 2008.
[13] Huang, Y.F; Optimal retailer’s ordering policies in the EOQ model under trade credit financing, J. Oper. Res. Soc. 54, 1011–1015, 2003.
[14] Huang, Y.F; An inventory model under two levels of trade credit and limited storage space derived without derivatives, Appl. Math. Model. 30, 418–436, 2006.
[15] Huang, Y.F; Optimal retailer’s replenishment decisions in the EPQ model under two levels of trade credit policy, Eur. J. Oper. Res. 176, 1577–1591, 2007.
[16] Urban,T.L; An extension of inventory models incorporating financing agreements with both suppliers and customers, Applied Mathematical Modelling 36, 6323–6330, 2012.
[17] Min,J; Zhou,Y; Zhao,J; An inventory model for deteriorating items under stock-dependent demand and two-level trade credit, Applied Mathematical Modelling 34, 3273–3285, 2010.
[18] Ghare, P.N; Schrader G.F; A model for exponentially decaying inventories, The Journal of Industrial Engineering, 238–243, 1963.

Files

History

  • Receive Date: 13 August 2014
  • Revise Date: 23 September 2014
  • Accept Date: 24 September 2014
  • Publish Date: 21 December 2014

Share

How to cite

Statistics