The optimal ordering time interval under trade credit financing

This paper discusses the economic order quantity (EOQ) under conditions of permissible delay in payments. In 1985, Goyal assumes that the unit selling price and the unit purchasing price are equal. This view is debatable sometimes. The main purpose of this paper is to modify Goyal's model to allow the unit selling price and the unit purchasing price not necessarily be equal to reflect the real-life situations. A modified inventory model is developed. Furthermore, three theorems are developed to efficiently determine the optimal cycle time and the optimal order quantity. Goyal's model is considered as a special case. Numerical examples are given to illustrate these theorems.