A two-warehouse EOQ model with two-level delay in payment

Abstract

This paper deals with a two-warehouse inventory policy with continuous release and two-level credit period in an infinite planning horizon. A retailer, the owner of two warehouses, offers and accepts a credit period to the customer and from the wholesaler, respectively. Duration of offering credit period is less than that of accepting credit period. The demand of the customers is considered stock dependent. Depending upon the time of offering and accepting credit periods and with respect to the time of exhaust of inventory in the two warehouses, different scenarios have been depicted. Here, decision variables are business periods for rented and market warehouses. The model has been formulated as a profit maximisation problem with respect to the retailer and optimised using the non-linear optimisation technique – generalised reduced gradient (LINGO) method. Optimal solutions under different scenarios are illustrated numerically and graphically.