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Multi-item, economic order quantity model with permissible delay in payments and a budget constraint

Author

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  • Srimathy Mohan
  • Gopalakrishnan Mohan
  • Ashok Chandrasekhar

Abstract

This paper investigates the optimal replenishment policy for multi-item ordering under the conditions of permissible delay in payment, a budget constraint and permissible partial payment at a penalty. Such conditions exist in the use of purchase cards to order merchandise directly from the supplier. The paper presents mathematical models and closed form solutions for three situations – permissible delay is negative (payment made before receipt of good), is less than the replenishment interval and is greater than the replenishment interval. The analyses indicate that it is more economical for the purchaser to make entire payments even when the interest earned is greater than the interest charged. [Received 06 April 2007; Revised 02 December 2007; Accepted 23 January 2008]

Suggested Citation

  • Srimathy Mohan & Gopalakrishnan Mohan & Ashok Chandrasekhar, 2008. "Multi-item, economic order quantity model with permissible delay in payments and a budget constraint," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 2(4), pages 446-460.
    • Handle: RePEc:ids:eujine:v:2:y:2008:i:4:p:446-460
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    Citations

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    Cited by:

    1. 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.
    2. Shaktipada Bhuniya & Biswajit Sarkar & Sarla Pareek, 2019. "Multi-Product Production System with the Reduced Failure Rate and the Optimum Energy Consumption under Variable Demand," Mathematics, MDPI, vol. 7(5), pages 1-20, May.
    3. Shizhen Bai & Na Xu, 2016. "The online seller's optimal price and inventory policies under different payment schemes," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 10(3), pages 285-300.
    4. Mitali Sarkar & Biswajit Sarkar & Muhammad Waqas Iqbal, 2018. "Effect of Energy and Failure Rate in a Multi-Item Smart Production System," Energies, MDPI, vol. 11(11), pages 1-21, October.
    5. Jing Zhang & Na Xu & Shizhen Bai, 2021. "The optimal pricing decisions for e-tailers with different payment schemes," Electronic Commerce Research, Springer, vol. 21(4), pages 955-982, December.
    6. Priyanka & Sarla Pareek, 2023. "A sustainable inventory model for stochastic demand using innovative multi-item production system with reduced failure rate," 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. 14(3), pages 844-864, June.

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