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Some replenishment rules considering payment periods and risk of outdating

Author

Listed:
  • E A Silver

    (University of Calgary)

  • D Costa

    (Université de Neuchâtel)

Abstract

This paper is devoted to the study of the effects of payment terms on the replenishment strategy. We use a discounting approach with Poisson demand, a linear inventory carrying cost and a very short replenishment lead time. The case of repeated identical payments at the end of a specified period of t days, as well as the case of a one time longer payment period of u days, are taken into consideration. In both situations we are able to develop rules to determine the appropriate replenishment quantities. We show how these rules change depending on whether the goods provided are subject to oudating or not. Numerical and graphical illustrations are provided.

Suggested Citation

  • E A Silver & D Costa, 1998. "Some replenishment rules considering payment periods and risk of outdating," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 49(8), pages 861-869, August.
    • Handle: RePEc:pal:jorsoc:v:49:y:1998:i:8:d:10.1057_palgrave.jors.2600574
    DOI: 10.1057/palgrave.jors.2600574
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    Citations

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    Cited by:

    1. Diwakar Gupta & Lei Wang, 2009. "A Stochastic Inventory Model with Trade Credit," Manufacturing & Service Operations Management, INFORMS, vol. 11(1), pages 4-18, November.
    2. Sounderpandian, Jayavel & Prasad, Sameer & Madan, Manu, 2008. "Supplies from developing countries: Optimal order quantities under loss risks," Omega, Elsevier, vol. 36(1), pages 122-130, February.

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