Article ID: | iaor200159 |
Country: | Netherlands |
Volume: | 63 |
Issue: | 2 |
Start Page Number: | 207 |
End Page Number: | 214 |
Publication Date: | Jan 2000 |
Journal: | International Journal of Production Economics |
Authors: | Liao Hung-Chang, Tsai Chih-Hung |
Keywords: | inflation, deteriorating items |
This study develops an inventory model for initial-stock-dependent consumption rate when a delay in payment is permissible. In the inventory model, shortages are not allowed. The effect of the inflation rate, deterioration rate, initial-stock-dependent consumption rate and delay in payment are discussed. In the study, mathematical models are also derived under two different circumstances, i.e., Case I: The credit period is less than or equal to the cycle time for settling the account; and Case II: The credit period is greater than the cycle time for settling the account. Besides, expressions for an inventory system's total cost are derived for these two cases. Moreover, a computational procedure and GINO are proposed to obtain the optimal order size and cycle time. The results can help managers determine the optimal total cost. Finally, a numerical example demonstrates the applicability of the proposed model.