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An EOQ model for retailers partial permissible delay in payment linked to order quantity with shortages

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  • Vandana,
  • Sharma, B.K.

Abstract

Living in the business world, maximizing owner’s happiness or getting paid by the sales of goods or services on an open account at some reasonable profit is the main purpose of any business. The credit functions play a vital role within the organization. In this paper, we develop an inventory model for retailers partial permissible delay-in-payment linked to order quantity with shortage, which is partial backlogged. Here, we consider two different cases, i.e. in first, the trade-credit period (M) is greater than or equal to the time interval tw, that w units are depleted to zero due to demand; and later, the trade-credit period (M) is less than the time interval tw. The principle objective of the introduced model is to minimize the total inventory cost by finding an optimal replenishment policy. Required theorems are provided to verify the optimal solutions. Various numerical examples and managerial implications are discussed to check and substantiate the intransigent results.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:matcom:v:125:y:2016:i:c:p:99-112
    DOI: 10.1016/j.matcom.2015.11.008
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    References listed on IDEAS

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    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. 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.
    3. Chih-Te Yang & Qinhua Pan & Liang-Yuh Ouyang & Jinn-Tsair Teng, 2013. "Retailer's optimal order and credit policies when a supplier offers either a cash discount or a delay payment linked to order quantity," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 7(3), pages 370-392.
    4. 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.
    5. 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.
    6. 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.
    7. Liao, Hung-Chang & Tsai, Chih-Hung & Su, Chao-Ton, 2000. "An inventory model with deteriorating items under inflation when a delay in payment is permissible," International Journal of Production Economics, Elsevier, vol. 63(2), pages 207-214, January.
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    Cited by:

    1. R. Sundara rajan & R. Uthayakumar, 2017. "Comprehensive solution procedure for optimizing replenishment policies of instantaneous deteriorating items with stock-dependent demand under partial trade credit linked to order quantity," 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(2), pages 1343-1373, November.
    2. Chaudhari, Urmila & Bhadoriya, Amrita & Jani, Mrudul Y. & Sarkar, Biswajit, 2023. "A generalized payment policy for deteriorating items when demand depends on price, stock, and advertisement under carbon tax regulations," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 207(C), pages 556-574.
    3. Longfei He & Han Gao & Xiao Zhang & Qinpeng Wang & Chenglin Hu, 2018. "Optimal Replenishment for Perishable Products with Inventory-Dependent Demand and Backlogging under Continuous and Discrete Progressive Payments," Sustainability, MDPI, vol. 10(10), pages 1-22, October.
    4. Armin Jabbarzadeh & Leyla Aliabadi & Reza Yazdanparast, 2021. "Optimal payment time and replenishment decisions for retailer’s inventory system under trade credit and carbon emission constraints," Operational Research, Springer, vol. 21(1), pages 589-620, March.
    5. Luis A. San-José & Joaquín Sicilia & Manuel González-de-la-Rosa & Jaime Febles-Acosta, 2021. "Optimal Price and Lot Size for an EOQ Model with Full Backordering under Power Price and Time Dependent Demand," Mathematics, MDPI, vol. 9(16), pages 1-16, August.
    6. Ata Allah Taleizadeh & Sara Tavassoli & Arijit Bhattacharya, 2020. "Inventory ordering policies for mixed sale of products under inspection policy, multiple prepayment, partial trade credit, payments linked to order quantity and full backordering," Annals of Operations Research, Springer, vol. 287(1), pages 403-437, April.

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