scholarly journals Retailer’s replenishment policies under conditions of permissible delay in payments

2004 ◽  
Vol 14 (2) ◽  
pp. 231-246 ◽  
Author(s):  
Yung-Fu Huang
Keyword(s):  
Cycle Time ◽  
Real Life ◽  
Optimal Order ◽  
Selling Price ◽  
Order Quantity ◽  
Permissible Delay In Payments ◽  
Credit Period ◽  
Optimal Order Quantity ◽  
Delay In Payments ◽  
S Model

Goyal (1985) is frequently cited when the inventory systems under conditions of permissible delay in payments are discussed. Goyal implicitly assumed that: 1. The unit selling price and the unit purchasing price are equal; 2. At the end of the credit period, the account is settled. The retailer starts paying for higher interest charges on the items in stock and returns money of the remaining balance immediately when the items are sold. But these assumptions are debatable in real-life situations. The main purpose of this paper is to modify Goyal?s model to allow the unit selling price and the unit purchasing price not necessarily be equal to reflect the real-life situations. Furthermore, this paper will adopt different payment rule. We assume that the retailer uses sales revenue during the permissible credit period to make payment to the supplier at the end of the credit period. If it is not enough to pay off the purchasing cost of all items, the retailer will pay off the remaining balance by taking loan from the bank. So, the retailer starts paying for the interest charges on the amount of loan from the bank after the account is settled. Then the retailer will return money to the bank at the end of the inventory cycle. Under these conditions, we model the retailer?s inventory system as a cost minimization problem to determine the retailer?s optimal cycle time and optimal order quantity. Four cases are developed to efficiently determine the optimal cycle time and the optimal order quantity. Numerical examples are given to illustrate these cases. Comparing with Goyal?s model, we also find that the optimal cycle times in this paper are not longer than those of Goyal?s model.

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

2007 ◽  
Vol 17 (2) ◽  
pp. 177-193 ◽  
Author(s):  
Yung-Fu Huang ◽  
Chung-Li Chou ◽  
Jui-Jung Liao
Keyword(s):  
Cycle Time ◽  
Optimal Order ◽  
Selling Price ◽  
Order Quantity ◽  
Permissible Delay In Payments ◽  
Special Cases ◽  
Time Optimal ◽  
Optimal Order Quantity ◽  
Cash Discount ◽  
Delay In Payments

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.

scholarly journals ENVIRONMENTALLY SUSTAINABLE INVENTORY MODEL UNDER PERMISSIBLE DELAY IN PAYMENTS

2013 ◽  
Vol 11 (10) ◽  
pp. 3071-3078 ◽  
Author(s):  
W. Ritha ◽  
I. Antonitte Vinoline
Keyword(s):  
Cycle Time ◽  
Cost Minimization ◽  
Extreme Case ◽  
Optimal Order ◽  
Order Quantity ◽  
Permissible Delay In Payments ◽  
Replenishment Policy ◽  
Optimal Order Quantity ◽  
Cost Minimization Problem ◽  
Delay In Payments

Within the economic order quantity (EOQ) framework, the main purpose of this paper is to investigate the supplier optimal replenishment policy of permissible delay in payments. All previously published articles dealing with optimal order quantity with permissible delay in payments assumed that the supplier only offers the retailer fully permissible delay in payments if the retailer ordered a sufficient quantity. Otherwise, permissible delay in payments would not be permitted. However, in this paper, we want to extend this extreme case by developing the mathematical model for determining the cycle time. Under this condition, we model the retailers inventory system as a cost minimization problem to determine the retailers optimal inventory cycle time and optimal order quantity. Finally, numerical examples are given to illustrate all these cases and to draw managerial insights.

scholarly journals Managing the Newsvendor Modeled Product System with Random Capacity and Capacity-Dependent Price

2015 ◽  
Vol 2015 ◽  
pp. 1-10 ◽  
Author(s):  
Qingying Li ◽  
Ciwei Dong ◽  
Ruixin Zhuang
Keyword(s):  
Numerical Study ◽  
Market Price ◽  
Optimal Order ◽  
Selling Price ◽  
Newsvendor Model ◽  
Order Quantity ◽  
Product System ◽  
Random Capacity ◽  
Optimal Order Quantity ◽  
House Production

We consider a newsvendor modeled product system, where the firm provides products to the market. The supply capacity of the product is random, so the firm receives either the amount of order quantity or the realized capacity, whichever is smaller. The market price is capacity dependent. We consider two types of production cost structures: the procurement case and the in-house production case. The firm pays for the received quantity in the former case and for the ordered quantity in the latter case. We obtain the optimal order quantities for both cases. Comparing with the traditional newsvendor model, we find that the optimal order quantity in both the procurement case and the in-house production case are no greater than that in the traditional newsvendor model with a fixed selling price. We also find that the optimal order quantity for the procurement case is greater than that for the in-house production case. Numerical study is conducted to investigate the sensitivity of the optimal solution versus the distribution of the random capacity/demand.

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

2007 ◽  
Vol 24 (05) ◽  
pp. 613-630 ◽  
Author(s):  
CHIA-HSIEN SU ◽  
LIANG-YUH OUYANG ◽  
CHIA-HUEI HO ◽  
CHUN-TAO CHANG
Keyword(s):  
System Performance ◽  
Trade Credit ◽  
Optimal Order ◽  
Profit Function ◽  
Entire System ◽  
Order Quantity ◽  
Supply Chain System ◽  
Credit Period ◽  
Production Run ◽  
Optimal Order Quantity

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 retailer's 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 customer's credit period then the entire system and every channel partner can benefit.

scholarly journals An inventory model for deteriorating items under the condition of permissible delay in payments

2002 ◽  
Vol 12 (1) ◽  
pp. 73-84 ◽  
Author(s):  
Horng-Jinh Chang ◽  
Chung-Yuan Dye ◽  
Bor-Ren Chuang
Keyword(s):  
Real World ◽  
Inventory Model ◽  
Economic Order Quantity ◽  
Economic Order ◽  
Order Quantity ◽  
Permissible Delay In Payments ◽  
Credit Period ◽  
Numerical Examples ◽  
Eoq Models ◽  
Delay In Payments

In economic order quantity (EOQ) models, it is often assumed that the payment of an order is made on the receipt of items by the inventory system. However, such an assumption is not quite practical in the real world. Under most market behaviors, it can be easily found that a vendor provides a credit period for buyers to stimulate demand. In this paper, a varying rate of determination and the condition of permissible delay in payments used in conjunction with the economic order quantity model are the focus of discussion. Numerical examples are presented to illustrate the proposed models.

Application of Simulation Techniques

2016 ◽  
pp. 268-299
Author(s):  
Ningombam Sanjib Meitei ◽  
Snigdha Banerjee
Keyword(s):  
Inventory Model ◽  
Optimal Order ◽  
Selling Price ◽  
Order Quantity ◽  
Factors Affecting ◽  
Simulation Techniques ◽  
Business System ◽  
Demand Rate ◽  
Optimal Values ◽  
Optimal Order Quantity

In the present work, we provide a simulated inventory model incorporating multiple stochastic factors affecting an inventory model. This can provide solutions to managerial problems faced by retailers that have been addressed through the Single period problem (SPP) models. For a time dependent SPP with multiple discounts of random amounts at random time points, we consider a model wherein the factors demand rate, lead-time, number of discounts during a season, discount rates, time epoch at which a new discount rate is offered are stochastic. We provide solution procedures as pseudo algorithms for simulating near optimal order quantity and estimate of rate of price decline as well as optimal values of order quantity and total expected profit for a given value of initial selling price. Illustrative examples are presented in order to enable the researchers to be able to apply the methodology explained. The technique for estimating the probability that a business system shall be profitable or be a loss venture is demonstrated using numerical example.

Static Inventory Model with Unknown Proportion of Defectives in the Supplied Lot

1983 ◽  
Vol 32 (3-4) ◽  
pp. 169-176
Author(s):  
S. P. Mukherjee ◽  
M. Pal
Keyword(s):  
Inventory Model ◽  
Optimal Order ◽  
Selling Price ◽  
Order Quantity ◽  
Sampling Inspection ◽  
Shortage Cost ◽  
Inspection Plan ◽  
Purchase Cost ◽  
Net Profit ◽  
Optimal Order Quantity

A static inventory model where lots received (against orders) are accepted through a curtailed single sampling inspection plan has been considered. Since the proportion of non-defective units in a lot is not likely to be known in advance, a probability Jaw has been assumed for the same. The optimal order quantity has been obtained by maximizing the expected net profit, taking into account selling price, purchase cost, carrying cost, shortage cost, salvage cost and inspcctioo cost.

scholarly journals Retailer's EOQ Model with Limited Storage Space Under Partially Permissible Delay in Payments

2007 ◽  
Vol 2007 ◽  
pp. 1-18 ◽  
Author(s):  
Yung-Fu Huang ◽  
Chih-Sung Lai ◽  
Maw-Liann Shyu
Keyword(s):  
Lot Sizing ◽  
Cost Minimization ◽  
Optimal Order ◽  
Storage Space ◽  
Order Quantity ◽  
Permissible Delay In Payments ◽  
Eoq Model ◽  
Replenishment Policy ◽  
Cost Minimization Problem ◽  
Delay In Payments

The main purpose of this paper wants to investigate the optimal retailer's lot-sizing policy with two warehouses under partially permissible delay in payments within the economic order quantity (EOQ) framework. In this paper, we want to extend that fully permissible delay in payments to the supplier would offer the retailer partially permissible delay in payments. That is, the retailer must make a partial payment to the supplier when the order is received. Then the retailer must pay off the remaining balance at the end of the permissible delay period. In addition, we want to add the assumption that the retailer's storage space is limited. That is, the retailer will rent the warehouse to store these exceeding items when the order quantity is larger than retailer's storage space. Under these conditions, we model the retailer's inventory system as a cost minimization problem to determine the retailer's optimal cycle time and optimal order quantity. Three theorems are developed to efficiently determine the optimal replenishment policy for the retailer. Finally, numerical examples are given to illustrate these theorems and obtained a lot of managerial insights.

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