An inventory control problem for deteriorating items with back-ordering and financial considerations under two levels of trade credit linked to order quantity

Ata Allah Taleizadeh · Shib Sankar Sana

80 citations0/0 files storedJournal of Industrial and Management Optimization

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Supply Chain and Inventory Management Sustainable Supply Chain Management Working Capital and Financial Performance

Abstract

The paper deals with an inventory control problem for perishable items where two level credit periods depend on the order quantity over the finite time horizon. We assume that the supplier offers delay in payment on outstanding cost of purchasing goods to the retailer when purchasing amount is more than a fixed large amount. Moreover, the retailer offers a delay period to the customers for payment of their purchasing goods. In the inventory system, shortage is permitted and it is completely backordered.The net present value of the retailer's cost function, including costs of ordering, inventory holding, shortage, purchasing and other opportunities, is optimized. Then, an algorithm is proposed to determine the optimal values of order quantity, shortage quantity, number of cycles and the total cost of the system. Finally, a numerical example with sensitivity analysis of the key parameters is illustrated to show the applicability of the proposed model.

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References

1985Economic Order Quantity under Conditions of Permissible Delay in Payments 1995Ordering Policies of Deteriorating Items under Permissible Delay in Payments 2012Review of inventory systems with deterioration since 2001 2003An EOQ model for deteriorating items under supplier credits linked to ordering quantity 2011An EOQ model with delay in payments and time varying deterioration rate 2000Optimal payment time for a retailer under permitted delay of payment by the wholesaler 2003An EOQ model with deteriorating items under inflation when supplier credits linked to order quantity 1997An EOQ model with stock-dependent demand, shortage, inflation and time discounting

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