An inventory model with deteriorating items under inflation when a delay in payment is permissable

An inventory model with deteriorating items under inflation when a delay in payment is permissable

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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: ,
Keywords: inflation, deteriorating items
Abstract:

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.

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