An EPQ model under two levels of trade credit and limited storage space

Abstract: In this article, a production inventory model is developed to determine the retailer’s optimal replenishment decisions under two levels of trade credit and limited storage space. Two levels of trade credit refers that the supplier provides to his/her retailer a permissible delay period to settle the account and the retailer also in turn provides a delay period to his/her customer for paying of purchasing goods. The retailer’s credit period M offered by supplier is greater than customers credit period N provides by the retailer. This paper investigates retailer optimal replenishment policy under finite replenishment rate by minimizing the total annual inventory cost. Three theorems are developed to determine optimal cycle time, optimal relevant cost and optimal order quantity for retailers accurate and rapidly. A numerical example is used to analyze the validity of propose model, Sensitive analysis shows managerial decisions for retailer.

How to cite this paper

 kumar, A., Kaanodiya, K & Pachauri, R. (2012). An EPQ model under two levels of trade credit and limited storage space.International Journal of Industrial Engineering Computations , 3(3), 445-462.

Refrences

Abad P.L., & Jaggi C.K. (2003). A joint approach for setting unit price and the length of the credit period for a seller when end demand is price sensitive. International Journal of Production Economics 83,115-122.

Aggrawal, S.P., & Jaggi C.K. (1995). Ordering policies of deteriorating items under permissible delay in payments. Journal of Operation Research Society, 46, 658-662.

Benkherouf, L. (1997). A deterministic order level inventory model for deteriorating items with two storage facilities. International Journal of Production Economics, 48(2), 167-175.

Bhunia, A.K., & Maiti M. (1998). A two warehouse inventory model for deteriorating items with a linear trend in demand and shortages. Journal of the Operation Research Society, 49(3), 287-292.

Chand, S., & Ward, J. (1987). A note on economic order quantity under conditions of permissible delay in payments. Journal of Operational Research Society, 38, 83-84.

Chang, C.T., Ouyang, L.Y., & Teng, J.T. (2003). An EOQ model for deteriorating items under supplier credit linked to ordering quantity. Applied Mathematical Modelling, 27, 983-996.

Chang, H.C., & Dye, C.Y. (2001). An inventory model for deteriorating items with partial backlogging and permissible delay in payments. International Journal of System Science, 32 ,345-352.

Chang, H.J., Hung C.H., & Dye, C.Y. (2001). An inventory model for deteriorating items with linear trend demand under the condition of permissible delay in payments. Production Planning and Control 12, 274-282.

Chen, M. S., & Chuang, C.C. (1999). An inventory analysis of light buyer’s economic order model under trad4 credit. Asia-Pacific Journal of Operational Research, 16 (1) 23-34.

Chung, K.J. (1998). Theorem on the determination of economic order quantity under conditions of permissible delay in payments. Computer and Operational Research, 25, 49-52.

Chung, K.J., & Huang, T.S. (2005). The Algorithm to the EOQ Model for Inventory control and Trade-credit. Opsearch, 42, 16-27

Chung, K.J., & Huang, Y.F. (2003). The optimal cycle time for EPQ inventory model under permissible delay in payments. International Journal of Production Economics, 84, 307-318.

Chung K.J., & Liao J.J. (2004). Lot-sizing decisions under trade credit depending on the ordering quantity, Computer and Operational Research, 31, 909-928.

Goswami, A., & Chaudhuri, K.S. (1992). An economic order quantity model for the items with two levels of storage for a linear trend in demand. Journal of Operational Research Society, 43, 2 157-167.

Goyal, S.K. (1985). Economic order quantity under conditions of permissible delay in payments. Journal of Operation Research Society, 36, 335-338

Huang, Y.F. (2003). Optimal retailer’s ordering policies in the EOQ model under trade credit financing. Journal of Operational Research Society, 54, 1011-1015.

Huang, Y.F. (2006). An Inventory model under two levels of trade credit and limited storage space derived without derivatives. Applied Mathematical Modelling, 30, 418-436.

Huang, Y.F. (2007a). Economic order quantity under conditionally permissible delay in payments. European Journal of Operational Research, 176, 911-924.

Huang Y.F., & Chung K.J. (2003). Optimal replenishment and payment policies in the EOQ model under cash discount and trade credit. Asia-Pacific Journal of Operation Research, 20,177-190.

Huang, Y. F. (2007b) Optimal retailer’s replenishment decisions in the EPQ model under two levels of trade credit policy. European Journal of Operational Research. 176, 1577-1571.

Hwang H., & Shinn S.W. (1997) Retailer’s pricing and lot sizing policy for exponentially deteriorating product under the condition of permissible delay in payments, Computer and Operational Research 24, 539-547

Jamal, A.M.M., Sarker, B.R. & Wang, S. (1997) an ordering policy for deteriorating items with allowable shortage and permissible delay in payment, Journal of Operation Research Society 48, 826-833

Jamal, A.M.M., Sarker, B.R. & Wang, S.(2000) Optimal payment time for a retailer under permitted delay of payment by the Wholesaler, International Journal of Production Economics 66, 59- 66

Lee, C.C., & Hsu, S.L. (2009). A two-warehouse production model for deteriorating inventory items with time-dependent demands. European Journal of Operational Research, 203(2), 593-600.

Liao, H.C., Tsai, C.H., & Su, C.T. (2000). An inventory model with deteriorating items under inflation when a delay in payment is permissible. International Journal of Production Economics, 63, 207-214.

Liao, J.J. (2007). On an EPQ model for deteriorating items under permissible delay in payments. Applied mathematical modeling, 31, 393-403.

Mondal, B.N., & Phaujdar, S. (1989b). An inventory model for deteriorating items and stock-dependent consumption rate. Journal of Operation Research Society, 40, 483-488.

Mondal, B.N., & Phaujdar, S. (1989c). A note on an inventory model with stock-dependent consumption rate. Opsearch, 26, 43-46.

Pakkala, T.P.M., & Achary, K.K. (1992). A deterministic inventory model for deteriorating items with two warehouse and finite replenishment rate. European Journal of Operational Research, 57(1), 71-76.

Salameh M.K., Abbound N.E., El-kassar A.N., & Ghattas R.E. (2003). Continuous review inventory model with delay in payments. International Journal of Production Economics, 85, 91-95.

Sarker, B.R., Jamal, A.M.M., & Wang S. (2000a). Supply chain model for perishable products under inflation and permissible delay in payment. Computer and Operational Research, 27, 59-75.

Sarker, B.R., Jamal A.M.M.S., & Wang. S. (2000b). Optimal payment time under permissible delay in payment for products with deteriorating. Production Planning and Control, 11, 380-390.

Shah, N. H. (1993a). Probabilistic time-scheduling model for an exponential decaying inventory when delay in payments is permissible. International Journal of Production Economics, 32, 77-82.

Shah, N. H. (1993b). A lot size model for exponential decaying inventory when delay in payment is permissible. Cashiers du CERO, 35, 115-123.

Shah, V. R., & Sreehari, M. (1996). An inventory model for a system with multiple storage facility. Opsearch, 2, 96-106.

Sharma, K.V.S. (1987). A deterministic order level model for deteriorating items with two storage facilities. European Journal of Operational Research, 29(1), 70-73.

Teng, J. T., & Chang, C. T. (2009). Optimal manufacturer’s replenishment policies in the EPQ model under two levels of trade credit policy. European Journal of Operational Research. 195, 358-363.

Teng, J. T., & Goyal, S. K. (2007). Optimal ordering policies for a retailer in a supply chain with up-stream and down-stream trade credit. Journal of Operational Research Society, 58, 1252-1255.

Teng, J.T. (2002). On the economic order quantity under conditions of permissible delay in payments. Journal of operation Research society, 53, 915-918.