Economic order quantity under conditionally permissible delay in payments

Within the economic order quantity (EOQ) framework, the main purpose of this paper is to investigate the retailerÕs optimal replenishment policy under permissible delay in payments. All previously published articles dealing with optimal order quantity with permissible delay in payments assumed that the supplier only offers the retailer fully permissible delay in payments if the retailer ordered a sufficient quantity. Otherwise, permissible delay in payments would not be permitted. However, in this paper, we want to extend this extreme case by assuming that the supplier would offer the retailer partially permissible delay in payments when the order quantity is smaller than a predetermined quantity. Under this condition, we model the retailerÕs inventory system as a cost minimization problem to determine the retailerÕs optimal inventory cycle time and optimal order quantity. Three theorems are established to describe the optimal replenishment policy for the retailer. Some previousl...

• Type: Journal
• Year: 2007
• Where: EOR
• Authors: Yung-Fu Huang
• Keywords: EOR 2007, Optimal Order Quantity, Order Quantity, Permissible Delay