However, in realistic environment, it can be observed that there may be some defective items in
an ordered lot, because of these defective items retailer incurs additional cost due to rejection,
repair and refund etc. Thus, inspection/screening of lot becomes indispensible in most of the
organizations. Moreover, it plays a very essential role when items are of deteriorating in nature.
Further, it is generally assumed that payment will be made to the supplier for the goods
immediately after receiving the consignment. Whereas, in practice, supplier does offers a
certain fixed period to the retailer for settling the account. During this period, supplier charges
no interest, but beyond this period interest is being charged as has been agreed upon. On the
other hand, retailer can earn interest on the revenue generated during this period. Keeping this
scenario in mind, an attempt has been made to formulate an inventory model for deteriorating
items with imperfect quality under permissible delay in payments. Results have been validated
with the help of a numerical example using Matlab7.0.1. Comprehensive sensitivity analysis
has also been presented.
How to cite this paper
Jaggia, C., Goel, S & Mittal, M. (2011). Economic order quantity model for deteriorating items with imperfect quality and permissible delay on payment.International Journal of Industrial Engineering Computations , 2(2), 237-248.
Refrences
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Ca´ rdenas-Barro´ n, L. E. (2000). Observation on: Economic production quantity model for items with imperfect quality. International Journal of Production Economics, 67 (2), 201.
Chung, K. J. & Huang, Y. F. (2006). Retailer’s optimal cycle times in the EOQ model with imperfect quality and permissible credit period. Journal of Quality and Quantity, 40, 59-77.
Chu, P., Chung, K.J. & Lan, S.P. (1998). Economic order quantity of deteriorating items under permissible delay in payments. Computers and Operational Research, 25, 817-824.
Davis , R. A. & Gaither , N. (1985). Optimal ordering policies under conditions of extended payment privileges, Management Sciences. 31, 499-509.
Ghare, P. M. & Schrader, G. F. (1963). A model for exponential decaying inventory. Journal of Industrial Engineering, 14(3), 238-243.
Goyal, S. K. & Ca´ rdenas-Barro´ n, L. E. (2002). Note on: Economic production quantity model for items with imperfect quality—a practical approach. International Journal of Production Economics, 77(1), 85–87.
Goyal, S. K. (1985). Economic order quantity under conditions of permissible delay in payment. Journal of the Operational Research Society, 36, 335–338.
Kingsman, B. G. (1983). The effect of payment rules on ordering and stocking in purchasing. Journal of the Operational Research Society, 34, 1085–1098.
Lee, H. L. & Rosenblatt, M. J. (1987). Simultaneous determination of production cycles and inspection schedules in a production system. Management Science, 33, 1125-1137.
Maddah, B. & Jaber, M. Y. (2008). Economic order quantity for items with imperfect quality: revisited. International Journal of Production Economics, 112(2), 808–815.
Maddah, B., Salameh, M. K., & Moussawi-Haidar, L. (2010). Order overlapping: A practical approach for preventing shortages during screening. Computers and Industrial Engineering, 58(4), 691–695.
Mandal, B. N. & Phaujdar, S. (1989). Some EOQ models under permissible delay in payments. International Journal of Managements Science, 5 (2), 99–108.
Papachristos, S. & Konstantaras, I. (2006). Economic ordering quantity models for items with imperfect quality. International Journal of Production Economics, 100(1), 148–154.
Porteus, E. L. (1986). Optimal lot sizing, process quality improvement and setup cost reduction. Operations Research, 34(1), 137-144.
Raafat, F., Wolfe, P. M., & Eddin, H. K. (1991). An inventory model for deteriorating items. Computers and Industrial Engineering, 20(1), 89-94.
Rosenblatt, M. & Lee, H., (1986). Economic production cycles with imperfect production processes. IIE Transactions, 18(1), 48–55.
Ross, S. M. (1996). Stochastic Processes, second ed. Wiley, New York, NY.
Salameh, M. K. & Jaber, M. Y. (2000). Economic production quantity model for items with imperfect quality. International Journal of Production Economics, 64 (3), 59–64.
Soni, H. Shah, N. H. & Jaggi, C.K. (2010). Inventory models and trade credit. Journal of Control and Cybernetics, 39. (To appear)
Yano, C. A. & Lee, H. L. (1995). Lot sizing with random yields: A review. Operations Research, 43 (2), 311–334.
Ca´ rdenas-Barro´ n, L. E. (2000). Observation on: Economic production quantity model for items with imperfect quality. International Journal of Production Economics, 67 (2), 201.
Chung, K. J. & Huang, Y. F. (2006). Retailer’s optimal cycle times in the EOQ model with imperfect quality and permissible credit period. Journal of Quality and Quantity, 40, 59-77.
Chu, P., Chung, K.J. & Lan, S.P. (1998). Economic order quantity of deteriorating items under permissible delay in payments. Computers and Operational Research, 25, 817-824.
Davis , R. A. & Gaither , N. (1985). Optimal ordering policies under conditions of extended payment privileges, Management Sciences. 31, 499-509.
Ghare, P. M. & Schrader, G. F. (1963). A model for exponential decaying inventory. Journal of Industrial Engineering, 14(3), 238-243.
Goyal, S. K. & Ca´ rdenas-Barro´ n, L. E. (2002). Note on: Economic production quantity model for items with imperfect quality—a practical approach. International Journal of Production Economics, 77(1), 85–87.
Goyal, S. K. (1985). Economic order quantity under conditions of permissible delay in payment. Journal of the Operational Research Society, 36, 335–338.
Kingsman, B. G. (1983). The effect of payment rules on ordering and stocking in purchasing. Journal of the Operational Research Society, 34, 1085–1098.
Lee, H. L. & Rosenblatt, M. J. (1987). Simultaneous determination of production cycles and inspection schedules in a production system. Management Science, 33, 1125-1137.
Maddah, B. & Jaber, M. Y. (2008). Economic order quantity for items with imperfect quality: revisited. International Journal of Production Economics, 112(2), 808–815.
Maddah, B., Salameh, M. K., & Moussawi-Haidar, L. (2010). Order overlapping: A practical approach for preventing shortages during screening. Computers and Industrial Engineering, 58(4), 691–695.
Mandal, B. N. & Phaujdar, S. (1989). Some EOQ models under permissible delay in payments. International Journal of Managements Science, 5 (2), 99–108.
Papachristos, S. & Konstantaras, I. (2006). Economic ordering quantity models for items with imperfect quality. International Journal of Production Economics, 100(1), 148–154.
Porteus, E. L. (1986). Optimal lot sizing, process quality improvement and setup cost reduction. Operations Research, 34(1), 137-144.
Raafat, F., Wolfe, P. M., & Eddin, H. K. (1991). An inventory model for deteriorating items. Computers and Industrial Engineering, 20(1), 89-94.
Rosenblatt, M. & Lee, H., (1986). Economic production cycles with imperfect production processes. IIE Transactions, 18(1), 48–55.
Ross, S. M. (1996). Stochastic Processes, second ed. Wiley, New York, NY.
Salameh, M. K. & Jaber, M. Y. (2000). Economic production quantity model for items with imperfect quality. International Journal of Production Economics, 64 (3), 59–64.
Soni, H. Shah, N. H. & Jaggi, C.K. (2010). Inventory models and trade credit. Journal of Control and Cybernetics, 39. (To appear)
Yano, C. A. & Lee, H. L. (1995). Lot sizing with random yields: A review. Operations Research, 43 (2), 311–334.