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An Economic Order Quantity Model for Defective Items under Permissible Delay in Payments and Shortage

Author

Listed:
  • Harun Sulak
  • Abdullah Eroglu
  • Mustafa Bayhan
  • M. Ali Avci

Abstract

Economic Order Quantity models have many assumptions that are not satisfied completely with recent economic conditions. One of these assumptions is that all items in an ordered lot are perfect quality. But a portion of ordered lot may be defective. The other unrealistic assumption is that the payments are made as soon as the items received. However, in today’s business transactions it is more common that the supplier will allow certain fixed period known as permissible delay in payment to the retailer for settling the total amount of received goods. In this study, by loosening these two unrealistic assumptions, a new model is proposed in the case of defective items, permissible delay in payments and shortage. For two case of permissible delay, the optimal values are determined. Furthermore, numerical examples are given for the developed model and changes in the optimal values are analyzed with sensitivity analysis. Finally some previously published results are deduced as special cases of proposed model.

Suggested Citation

  • Harun Sulak & Abdullah Eroglu & Mustafa Bayhan & M. Ali Avci, 2015. "An Economic Order Quantity Model for Defective Items under Permissible Delay in Payments and Shortage," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 5(1), pages 302-316, January.
    • Handle: RePEc:hur:ijarbs:v:5:y:2015:i:1:p:302-316
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    References listed on IDEAS

    as
    1. Sana, Shib Sankar & Chaudhuri, K.S., 2008. "A deterministic EOQ model with delays in payments and price-discount offers," European Journal of Operational Research, Elsevier, vol. 184(2), pages 509-533, January.
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    3. 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.
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    5. Kun-Jen Chung & Yung-Fu Huang, 2006. "Retailer’s Optimal Cycle Times in the EOQ Model with Imperfect Quality and a Permissible Credit Period," Quality & Quantity: International Journal of Methodology, Springer, vol. 40(1), pages 59-77, February.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    EOQ; Defective Items; Permissible Delay in Payments; Shortage;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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