Supply chain models for perishable products under inflation and permissible delay in payment

Supply chain models for perishable products under inflation and permissible delay in payment

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Article ID: iaor200169
Country: United Kingdom
Volume: 27
Issue: 1
Start Page Number: 59
End Page Number: 75
Publication Date: Jan 2000
Journal: Computers and Operations Research
Authors: , ,
Keywords: supply chain, deteriorating items
Abstract:

In many inventory situations, purchasers are allowed a period to pay back for the goods bought without paying any interest. Depending on the length of that payment period, the purchaser can earn interest on the sales of the inventory. This paper develops a model to determine an optimal ordering policy for deteriorating items under inflation, permissible delay of payment and allowable shortage. The present value of total cost incurred in this inventory system is developed first, then an optimal order quantity and maximum allowable shortage are obtained by using a search procedure. The effect of inflation and time value of money was investigated under given sets of inflation and discount rates. This study shows that the optimal order quantity and maximum allowable shortage vary with the difference between inflation and time discount. Computational results provide some interesting policy implications.

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