AJOR  Vol.2 No.1 , March 2012
Optimal Policy for EOQ Model with Two Level of Trade Credits in One Replenishment Cycle
ABSTRACT
In general, a supplier/retailer frequently offer trade credit to stimulate their respective sales. The main purpose of this paper is to investigate the optimal supplier/retailer’s replenishment decisions under two levels of trade credit policy within the economic order quantity (EOQ) framework. This paper deals with the supplier/retailer’s inventory replenishment problem under two levels of trade credit in one replenishment cycle. A different approach of two levels of trade credit is used, which give more freedom to the supplier/retailer in business. In addition, the easy-to-use procedure is developed to efficiently find the optimal cycle time for the retailer under minimizing annual total relevant cost. Finally, a numerical example is given to illustrate these results.

Cite this paper
A. Sharma, R. Goel and N. Dua, "Optimal Policy for EOQ Model with Two Level of Trade Credits in One Replenishment Cycle," American Journal of Operations Research, Vol. 2 No. 1, 2012, pp. 51-58. doi: 10.4236/ajor.2012.21006.
References
[1]   K. J. Chung, “A Theorem on the Determination of Economic Order Quantity under Conditions of Permissible Delay in Payments,” Computers & Operations Research, Vol. 25, 1998, pp. 49-52.

[2]   Y. F. Huang, “Optimal Retailer’s Ordering Policies in the EOQ Model under Trade Credit Financing,” Journal of Operational Research Society, Vol. 54, No. 9, 2003, pp. 1011-1015. doi:10.1057/palgrave.jors.2601588

[3]   K. J. Chung and J. J. Liao, “Lot-Sizing Decisions under Trade Credit Depending on the Ordering Quantity,” Computers & Operations Research, Vol. 31, No. 6, 2004, pp. 909-928. doi:10.1016/S0305-0548(03)00043-1

[4]   A. Jamal, B. Sarker and S. Wang, “An Ordering Policy for Deteriorating Items with Allowable Shortage and Permissible Delay in Payment,” Journal of Operational Research Society, Vol. 48, No. 8, 1997, pp. 826-833.

[5]   H. J. Chang and C. Y. Dye, “An Inventory Model for Deteriorating Items with Partial Backlogging and Permissible Delay in Payments,” Journal of Systems Science, Vol. 32, No. 3, 2001, pp. 345-352. doi:10.1080/002077201300029700

[6]   K. N. Huang and J. J. Liao, “A Simple Method to Locate the Optimal Solution for Exponentially Deteriorating Items under Trade Credit Financing,” Computers and Mathematics with Applications, Vol. 56, No. 4, 2008, pp. 965-977. doi:10.1016/j.camwa.2007.08.049

[7]   V. B. Kreng and S. J. Tan, “The Optimal Replenishment Decisions under Two Levels of Trade Credit Policy Depending on the Order Quantity,” Expert Systems with Applications, Vol. 37, No. 7, 2010, pp. 5514-5522. doi:10.1016/j.eswa.2009.12.014

[8]   L. Y. Ouyang, K. S. Wu and C. T. Yang, “A Study on an Inventory Model for Non-Instantaneous Deteriorating Items with Permissible Delay in Payments,” Computers and Industrial Engineering, Vol. 51, No. 4, 2006, pp. 637-651. doi:10.1016/j.cie.2006.07.012

[9]   K. L. Hou and L. C. Lin, “A Cash Flow Oriented EOQ Model with Deteriorating Items under Permissible Delay in Payments,” Journal of Applied Sciences, Vol. 9, No. 9, 2009, pp. 1791-1794. doi:10.3923/jas.2009.1791.1794

 
 
Top