An EPQ model under cash discount and permissible delay in payments derived without derivatives

Abstract

The main purpose of this paper is to investigate the case where the retailer’s unit selling price and the purchasing price per unit are not necessarily equal within the economic production quantity (EPQ) framework under cash discount and permissible delay in payments. We establish the retailer’s inventory system as a cost minimization problem to determine the retailer’s optimal inventory cycle time, optimal order quantity and optimal payment time. This paper provides an algebraic approach to determine the optimal cycle time, optimal order quantity and optimal payment time. This approach provides one theorem to efficiently determine the optimal solution. Some previously published results of other researchers are deduced as special cases. Finally, numerical examples are given to illustrate the result and the managerial insights are also obtained

A two warehouse deterministic inventory model for deteriorating items with power demand, time varying holding costs and trade credit in a supply chain system

“…Bera et al (2014) researched the retailer's ideal recharging strategy under reasonable postponement in installments. Huang (2016) researched the situation where the retailer's unit offering cost and the buying cost per unit is not really measure up to inside the financial generation amount (EPQ) system under money rebate and passable postponement in installments. Musa and Sani (2012) examined around a stock of weakening things where the disintegration starts when the things are supplied.…”

Reviewing the Literature of Inventory Models under Trade Credit Contact

“…They assumed that paying before the first defined period would cause no interest charge, while paying after the second predetermined period would result in larger interest on the unpaid balance in comparison to paying off between the first and the second delay periods. Huang et al [57] established an EPQ model under cash discount and delay in payment with different selling and purchasing costs to incorporate Teng [24], Chung and Huang [29], and Huang and Chung [32]. Soni and Shah [58] dealt with the problem of determining a retailer's optimal ordering policies when demand is stock-dependent and progressive credit periods are offered by the supplier.…”

“…Within EPQ framework, Feng et al [131] obtained a retailer's optimal replenishment time and payment policy under a two-level trade credit with twopart retailer's trade credit. They introduced Goyal [7], Teng [24], Chung and Huang, [29], Huang [30], Huang and Chung [32], Huang [38], Huang et al [57], Teng [74], and Teng and Chang [75], as some special cases of their presented model. By assuming a complete retailer's trade credit and partial customer's trade credit, price and credit dependent demand, and profit sharing contract, Giri and Maiti [132] established a two-echelon supply chain model with the objective of determining the manufacturer-retailer coordination policy.…”