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An EOQ model for decaying item with full advanced payment and conditional discount

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  • Shayan Tavakoli

    (University of Tehran)

  • Ata Allah Taleizadeh

    (University of Tehran)

Abstract

The classic economic order quantity model assumes that purchasing cost should be paid immediately after the delivery time. In practice, sometimes the vendors ask the buyers to prepay the entire or a percentage of the purchasing cost before delivery time. In this paper the buyer’s inventory control system for a decaying item under full prepayment scheme based on various conditions consisting of (1) no shortage, (2) full backordering shortage is allowed and (3) partial lost sale is permitted, are developed. Numerical analysis is provided to show the performance of the model and some managerial insights are presented based on the proposed solution technique and sensitivity analysis.

Suggested Citation

  • Shayan Tavakoli & Ata Allah Taleizadeh, 2017. "An EOQ model for decaying item with full advanced payment and conditional discount," Annals of Operations Research, Springer, vol. 259(1), pages 415-436, December.
    • Handle: RePEc:spr:annopr:v:259:y:2017:i:1:d:10.1007_s10479-017-2510-7
    DOI: 10.1007/s10479-017-2510-7
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    8. Taleizadeh, Ata Allah & Mohammadi, Babak & Cárdenas-Barrón, Leopoldo Eduardo & Samimi, Hadi, 2013. "An EOQ model for perishable product with special sale and shortage," International Journal of Production Economics, Elsevier, vol. 145(1), pages 318-338.
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    3. Mamta Gupta & Sunil Tiwari & Chandra K. Jaggi, 2020. "Retailer’s ordering policies for time-varying deteriorating items with partial backlogging and permissible delay in payments in a two-warehouse environment," Annals of Operations Research, Springer, vol. 295(1), pages 139-161, December.
    4. Khan, Md. Al-Amin & Cárdenas-Barrón, Leopoldo Eduardo & Treviño-Garza, Gerardo & Céspedes-Mota, Armando, 2023. "Installment for advance payment and pricing decisions for an inventory system under power demand pattern and all-units discount," International Journal of Production Economics, Elsevier, vol. 265(C).
    5. Md. Al-Amin Khan & Ali Akbar Shaikh & Gobinda Chandra Panda & Asoke Kumar Bhunia & Ioannis Konstantaras, 2020. "Non-instantaneous deterioration effect in ordering decisions for a two-warehouse inventory system under advance payment and backlogging," Annals of Operations Research, Springer, vol. 289(2), pages 243-275, June.
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    7. Yan Shi & Zhiyong Zhang & Sunil Tiwari & Zhiwen Tao, 2022. "Retailer's optimal strategy for a perishable product with increasing demand under various payment schemes," Annals of Operations Research, Springer, vol. 315(2), pages 899-929, August.
    8. Yu-Chung Tsao & Aisyah Dewi Muthi’ah & Thuy-Linh Vu & Niniet Indah Arvitrida, 2021. "Supply chain network design under advance-cash-credit payment," Annals of Operations Research, Springer, vol. 305(1), pages 251-272, October.
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    13. Jagadeesan Viswanath & Rajamanickam Thilagavathi & Krishnasamy Karthik & Miroslav Mahdal, 2023. "A Study of a Two Storage Single Product Inventory System with Ramp Type Demand, N-Phase Prepayment and Purchase for Exigency," Mathematics, MDPI, vol. 11(7), pages 1-17, April.
    14. Al-Amin Khan, Md. & Shaikh, Ali Akbar & Konstantaras, Ioannis & Bhunia, Asoke Kumar & Cárdenas-Barrón, Leopoldo Eduardo, 2020. "Inventory models for perishable items with advanced payment, linearly time-dependent holding cost and demand dependent on advertisement and selling price," International Journal of Production Economics, Elsevier, vol. 230(C).
    15. Ata Allah Taleizadeh & Shayan Tavakoli & Luis Augusto San-José, 2018. "A lot sizing model with advance payment and planned backordering," Annals of Operations Research, Springer, vol. 271(2), pages 1001-1022, December.
    16. Zheng, Qi & Zhou, Li & Fan, Tijun & Ieromonachou, Petros, 2019. "Joint procurement and pricing of fresh produce for multiple retailers with a quantity discount contract," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 130(C), pages 16-36.
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