Chun-Tao Chang

AN EOQ MODEL FOR DETERIORATING ITEMS UNDER SUPPLIER CREDITS LINKED TO ORDERING QUANTITY

In the classical inventory economic order quantity (or EOQ) model, it was assumed that the purchaser must pay for the items received immediately. However, in practices, the supplier usually is willing to provide the purchaser a permissible delay of payments if the purchaser orders a large quantity. As a result, in this paper, we establish an EOQ model for deteriorating items, in which the supplier provides a permissible delay to the purchaser if the order quantity is greater than or equal to a predetermined quantity. We then characterize the optimal solution and provide an easy-to-use algorithm to find the optimal order quantity and replenishment time. Finally, several numerical examples are given to illustrate the theoretical results.

An EOQ model with deteriorating items under inflation when supplier credits linked to order quantity

Abstract This study proposes an inventory model under a situation in which the supplier provides the purchaser a permissible delay of payments if the purchaser orders a large quantity. Shortages are not allowed and the effect of the inflation rate, deterioration rate and delay in payment are discussed as well. As a result, in this paper, we establish an EOQ model for deteriorating items under inflation when the supplier offers a permissible delay to the purchaser if the order quantity is greater than or equal to a predetermined quantity. We then characterize the optimal solution and provide an easy-to-use algorithm to find the optimal order quantity and replenishment time. Finally, some numerical examples are given to illustrate the theoretical results and made the sensitivity analysis of parameters on the optimal solutions.

Optimal manufacturer’s replenishment policies in the EPQ model under two levels of trade credit policy

In 2007, Huang proposed the optimal retailers replenishment decisions in the EPQ model under two levels of trade credit policy, in which the supplier offers the retailer a permissible delay period M, and the retailer in turn provides its customer a permissible delay period N (with NÂ

Inventory Lot-Size Models Under Trade Credits: A Review

Since the publication of the Goyal model in 1985, research on the modeling of inventory lot-size under trade credits has resulted in a body of literature. In this paper, we present a review of the advances in inventory literature under conditions of permissible delay in payments since 1985. We classify all related previous articles into five categories based on: (a) without deterioration, (b) with deterioration, (c) with allowable shortage, (d) linked to order quantity, and (e) with inflation. The motivations, extensions and weaknesses of various previous models have been discussed in brief to bring out pertinent information regarding model developments in the past two decades.

Optimal ordering and transfer policy for an inventory with stock dependent demand

This paper deals with an ordering-transfer inventory model to determine the retailers optimal order quantity and the number of transfers per order from the warehouse to the display area. It is assumed that the amount of display space is limited and the demand rate depends on the display stock level. The objective is to maximize the average profit per unit time yielded by the retailer. The proposed models and algorithms are developed to find the optimal strategy by retailer. Numerical examples are presented to illustrate the models developed and the sensitivity analysis is also reported.

Retailer’s optimal ordering policy under supplier credits

Abstract.In the traditional inventory economic order quantity (or EOQ) model, it was assumed that the customer must pay for the items as soon as the items are received. However, in practices, the supplier frequently offers a cash discount and/or a permissible delay to the customer especially when the economy turns sour. As a result, in this paper, we establish an optimal ordering policy for a retailer when the supplier provides not only a cash discount to avoid the default risk but also a permissible delay to increase sales. We then characterize the optimal solution and provide an easy-to-use algorithm to find the optimal order quantity and replenishment time. Furthermore, we also compare the optimal order quantity under supplier credits to the classical economic order quantity. Finally, several numerical examples are given to illustrate the theoretical results and make the sensitivity of parameters on the optimal solution.

Retailer's optimal ordering policies with trade credit financing

In this article, we extended Goyals model to develop an Economic Order Quantity (EOQ) model in which the supplier offers the retailer the permissible delay period M, and the retailer in turn provides the trade credit period N (with N ≤ M) to his/her customers. In addition, we assume that (1) the retailers selling price per unit is necessarily higher than its unit cost, and (2) the interest rate charged by a supplier or a bank is not necessarily higher than the retailers investment return rate. We then establish an appropriate EOQ model with trade credit financing, and provide an easy-to-use closed-form solution to the problem. Furthermore, we find it is possible that a well-established buyer may order a lower quantity and take the benefit of the permissible delay more frequently, which contradicts to the result by the previous researchers. Finally, we perform some sensitivity analyses to illustrate the theoretical results and obtain some managerial results.

Optimal ordering policies for deteriorating items using a discounted cash-flow analysis when a trade credit is linked to order quantity

In todays competitive market, in order to obtain a competition advantage, the supplier often offers the purchaser a longer permissible delay in payments or a price discount if the order quantity is greater than or equal to a predetermined quantity. As a result, in this paper, we establish an inventory model for the purchaser in which the supplier provides different trade credits. We then solve the inventory problem by using a discounted cash-flow (DCF) approach, characterize the optimal solution, and obtain some theoretical results to find the optimal order quantity and the optimal replenishment time. Finally, we provide several numerical examples to illustrate the results.

RETAILER'S INVENTORY POLICY AND SUPPLIER'S DELIVERY POLICY UNDER TWO-LEVEL TRADE CREDIT STRATEGY

This paper presents a stylized model to determine the optimal strategy for the integrated supplier-retailer inventory model under the condition that both the supplier and retailer have adopted a trade credit strategy. By analyzing the total channel profit function, we develop an algorithm to simultaneously determine the retailers optimal order quantity and the number of shipment per production run from the supplier to the retailer. Our results demonstrate that the trade credit strategy is effective to supply chain system performance when customers are sensitive to the credit period length offered by the retailer. Moreover, when customers are sensitive to the credit period, if the retailer conveys partial advantage gained from the trade credit offered by the supplier to customers by suitably adjusting the customers credit period then the entire system and every channel partner can benefit.

On “An EOQ model for perishable items under stock-dependent selling rate and time-dependent partial backlogging” by Dye and Ouyang

In 2005, Dye and Ouyang proposed an EOQ model for perishable items under stock-dependent selling rate and time-dependent partial backlogging, and then established the unique optimal solution to the problem when building up inventory is not profitable. However, they did not provide the optimal solution to the problem when building up inventory is profitable. In this note, we establish an appropriate model in which building up inventory is profitable, and then provide an algorithm to find the optimal solution to the problem. A numerical example is used to illustrate the proposed model.