IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v194y2009i2p418-431.html
   My bibliography  Save this article

An economic order quantity model for deteriorating items with partially permissible delay in payments linked to order quantity

Author

Listed:
  • Ouyang, Liang-Yuh
  • Teng, Jinn-Tsair
  • Goyal, Suresh Kumar
  • Yang, Chih-Te

Abstract

To attract more sales suppliers frequently offer a permissible delay in payments if the retailer orders more than or equal to a predetermined quantity W. In this paper, we generalize [Goyal, S.K., 1985. EOQ under conditions of permissible delay in payments. Journal of the Operational Research Society 36, 335-338] economic order quantity (EOQ) model with permissible delay in payment to reflect the following real-world situations: (1) the retailer's selling price per unit is significantly higher than unit purchase price, (2) the interest rate charged by a bank is not necessarily higher than the retailer's investment return rate, (3) many items such as fruits and vegetables deteriorate continuously, and (4) the supplier may offer a partial permissible delay in payments even if the order quantity is less than W. We then establish the proper mathematical model, and derive several theoretical results to determine the optimal solution under various situations and use two approaches to solve this complex inventory problem. Finally, a numerical example is given to illustrate the theoretical results.

Suggested Citation

  • Ouyang, Liang-Yuh & Teng, Jinn-Tsair & Goyal, Suresh Kumar & Yang, Chih-Te, 2009. "An economic order quantity model for deteriorating items with partially permissible delay in payments linked to order quantity," European Journal of Operational Research, Elsevier, vol. 194(2), pages 418-431, April.
    • Handle: RePEc:eee:ejores:v:194:y:2009:i:2:p:418-431
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377-2217(07)01215-5
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Teng, Jinn-Tsair & Chang, Chun-Tao & Goyal, Suresh Kumar, 2005. "Optimal pricing and ordering policy under permissible delay in payments," International Journal of Production Economics, Elsevier, vol. 97(2), pages 121-129, August.
    2. J-T Teng, 2002. "On the economic order quantity under conditions of permissible delay in payments," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 53(8), pages 915-918, August.
    3. Huang, Yung-Fu, 2007. "Economic order quantity under conditionally permissible delay in payments," European Journal of Operational Research, Elsevier, vol. 176(2), pages 911-924, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Teng, Jinn-Tsair & Min, Jie & Pan, Qinhua, 2012. "Economic order quantity model with trade credit financing for non-decreasing demand," Omega, Elsevier, vol. 40(3), pages 328-335.
    2. Jinn-Tsair Teng & Kuo-Ren Lou, 2012. "Seller’s optimal credit period and replenishment time in a supply chain with up-stream and down-stream trade credits," Journal of Global Optimization, Springer, vol. 53(3), pages 417-430, July.
    3. Chung, Kun-Jen & Liao, Jui-Jung, 2011. "The simplified solution algorithm for an integrated supplier-buyer inventory model with two-part trade credit in a supply chain system," European Journal of Operational Research, Elsevier, vol. 213(1), pages 156-165, August.
    4. Vandana, & Sharma, B.K., 2016. "An EOQ model for retailers partial permissible delay in payment linked to order quantity with shortages," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 125(C), pages 99-112.
    5. Teng, Jinn-Tsair, 2009. "Optimal ordering policies for a retailer who offers distinct trade credits to its good and bad credit customers," International Journal of Production Economics, Elsevier, vol. 119(2), pages 415-423, June.
    6. Liang-Yuh Ouyang & Chun-Tao Chang & Philip Shum, 2012. "The EOQ with defective items and partially permissible delay in payments linked to order quantity derived algebraically," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 20(1), pages 141-160, March.
    7. Ho, Chia-Huei & Ouyang, Liang-Yuh & Su, Chia-Hsien, 2008. "Optimal pricing, shipment and payment policy for an integrated supplier-buyer inventory model with two-part trade credit," European Journal of Operational Research, Elsevier, vol. 187(2), pages 496-510, June.
    8. Goyal, Suresh Kumar & Teng, Jinn-Tsair & Chang, Chun-Tao, 2007. "Optimal ordering policies when the supplier provides a progressive interest scheme," European Journal of Operational Research, Elsevier, vol. 179(2), pages 404-413, June.
    9. Chandan Mahato & Gour Chandra Mahata, 2023. "Optimal ordering policy under order-size dependent trade credit and complete backlogging derived algebraically," OPSEARCH, Springer;Operational Research Society of India, vol. 60(1), pages 420-444, March.
    10. Xu, Xinhan & Chen, Xiangfeng & Jia, Fu & Brown, Steve & Gong, Yu & Xu, Yifan, 2018. "Supply chain finance: A systematic literature review and bibliometric analysis," International Journal of Production Economics, Elsevier, vol. 204(C), pages 160-173.
    11. Chen, Liang-Hsuan & Kang, Fu-Sen, 2010. "Integrated inventory models considering the two-level trade credit policy and a price-negotiation scheme," European Journal of Operational Research, Elsevier, vol. 205(1), pages 47-58, August.
    12. D J Robb & E A Silver, 2006. "Inventory management under date-terms supplier trade credit with stochastic demand and leadtime," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 57(6), pages 692-702, June.
    13. Chen, Sheng-Chih & Cárdenas-Barrón, Leopoldo Eduardo & Teng, Jinn-Tsair, 2014. "Retailer’s economic order quantity when the supplier offers conditionally permissible delay in payments link to order quantity," International Journal of Production Economics, Elsevier, vol. 155(C), pages 284-291.
    14. Ouyang, Liang-Yuh & Ho, Chia-Huei & Su, Chia-Hsien, 2008. "Optimal strategy for an integrated system with variable production rate when the freight rate and trade credit are both linked to the order quantity," International Journal of Production Economics, Elsevier, vol. 115(1), pages 151-162, September.
    15. B. C. Giri & S. Sharma, 2016. "Optimal ordering policy for an inventory system with linearly increasing demand and allowable shortages under two levels trade credit financing," Operational Research, Springer, vol. 16(1), pages 25-50, April.
    16. Tsao, Yu-Chung & Sheen, Gwo-Ji, 2012. "A multi-item supply chain with credit periods and weight freight cost discounts," International Journal of Production Economics, Elsevier, vol. 135(1), pages 106-115.
    17. A. Thangam, 2017. "Retailer’s optimal replenishment policy in a two-echelon supply chain under two-part delay in payments and disruption in delivery," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 8(1), pages 26-46, January.
    18. Zhou, Yong-Wu & Zhong, Yuanguang & Li, Jicai, 2012. "An uncooperative order model for items with trade credit, inventory-dependent demand and limited displayed-shelf space," European Journal of Operational Research, Elsevier, vol. 223(1), pages 76-85.
    19. Pourmohammad Zia, Nadia & Taleizadeh, Ata Allah, 2015. "A lot-sizing model with backordering under hybrid linked-to-order multiple advance payments and delayed payment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 82(C), pages 19-37.
    20. Yu-Chung Tsao, 2015. "A piecewise nonlinear optimization for a production-inventory model under maintenance, variable setup costs, and trade credits," Annals of Operations Research, Springer, vol. 233(1), pages 465-481, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:194:y:2009:i:2:p:418-431. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.