Effect of shape of the demand function and permissible delay in payments on economic order quantity of high technology products

Effect of shape of the demand function and permissible delay in payments on economic order quantity of high technology products

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Article ID: iaor20174327
Volume: 28
Issue: 2
Start Page Number: 243
End Page Number: 263
Publication Date: Sep 2017
Journal: International Journal of Services and Operations Management
Authors: ,
Keywords: demand, simulation, statistics: distributions, retailing
Abstract:

Often, sales curve of a technology product exhibit a small peak and then decline, before continuing with the traditional bell shaped curve. Under this situation sales curve of the technology products show bimodal pattern. Traditional EOQ models have ignored the bimodal pattern of demand phenomenon during development of the policy frameworks. The approach in this paper is to study the effect of bimodal demand function, on economic order quantity model. Based on hazard rate demand, an integrated EOQ model is discussed in the paper for permissible delay in payments, under the assumption that supplier may offer credit periods to the retailer. The proposed framework is demonstrated with a numerical example and a comprehensive sensitivity analysis is also performed to validate effectiveness of the model.

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