An economic order quantity model with deteriorating items under inflation when supplier credits linked to order quantity

An economic order quantity model with deteriorating items under inflation when supplier credits linked to order quantity

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Article ID: iaor20043438
Country: Netherlands
Volume: 88
Issue: 3
Start Page Number: 307
End Page Number: 316
Publication Date: Jan 2004
Journal: International Journal of Production Economics
Authors:
Keywords: economic order, deteriorating items
Abstract:

This study proposes an inventory model under a situation in which the supplier provides the purchaser a permissible delay of payments if the purchaser orders a large quantity. Shortages are not allowed and the effect of the inflation rate, deterioration rate and delay in payment are discussed as well. As a result, in this paper, we establish an EOQ model for deteriorating items under inflation when the supplier offers a permissible delay to the purchaser if the order quantity is greater than or equal to a predetermined quantity. We then characterize the optimal solution and provide an easy-to-use algorithm to find the optimal order quantity and replenishment time. Finally, some numerical examples are given to illustrate the theoretical results and make the sensitivity analysis of parameters on the optimal solutions.

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