Optimal order size to take advantage of a one-time discount offer with allowed backorders

Abstract

a b s t r a c tIn this paper, we develop an inventory model for determining the optimal ordering policies for a buyer who operates an inventory policy based on an EOQ-type model with planned backorders when the supplier offers a temporary fixed-percentage discount and has specified a minimum quantity of additional units to purchase. A distinguishing feature of the model is that both fixed and linear backorder costs are included, whereas previous works include only the linear backordering cost. A numerical study is performed to provide insight into the behavior of the model.

EPQ models for items with imperfect quality and one-time-only discount

“…We can obtain from (3) the threshold value of h as h 1 = 15.25, which indicates that the manufacturer should place a special order from the OEM if the discounted price is less than 15.25. We then set parameter h = 11, 13, 14, 15, respectively, and calculate the corresponding Q Ã o and D (1) (Q Ã o ) from (5) and (4). The computed results are shown in Table 1.…”

“…Aucamp and Kuzdrall [3] presented the economic ordering quantity for a one-time-only discount and the impending price increase using a discounted cash-flow approach. Cardenas-Barron et al [4] developed an EOQ model with backorders to determine the optimal ordering policy when a temporary discount is offered. Hsu and Yu [5] developed an EOQ model with imperfect items under a one-time-only discount, where the defective items can be culled out by a 100% screening process and then sold in batch by the end of the screening process.…”

“…The second-order derivative of D (4) < 0, which means that D (4) (Q o ) is a decreasing function of Q o . Hence, Q Ã o = 0 is the maximum point of D (4) (Q o ).…”

Retailer’s replenishment policy for deteriorating item in response to future cost increase and incentive-dependent sale

“…Cárdenas-Barrón [16,17] extended the works by Sarker and Kindi [18,19] and studied an inventory model that determines the optimal ordering policies when the vendor offers a discount price. Cárdenas-Barrón et al [20] investigated an economic ordering quantity model for determining optimal ordering policies to consider planned backorders when a temporary discount is provided by the supplier. However, few researchers have considered the trade-off issue between future price increase and price discount for special sale over a finite horizon.…”

A EPQ inventory model with Stochastic Demand, finite production rate of Deteriorating items, Shortages And two-level of credit financing

“…Cárdenas-Barrón [1,2] developed model for finding optimal ordering policies in response to a discount offer. Later Cárdenas-Barrón et al [3] extended to take advantage of a one-time discount offer with allowed backorders. Widyadana et al [16] developed economic order quantity model for deteriorating items with planned backorder level.…”