AN EOQ MODEL FOR DETERIORATION ITEMS UNDER TRADE CREDIT POLICY IN A SUPPLY CHAIN SYSTEM

Abstract

This paper attempts to determine economic order quantity for deteriorating items under the conditions of permissible delay in payments, in which the supplier offers the retailer a permissible delay period and the retailer in turn provides a maximal trade credit period to their customers in a supply chain system. A theorem is developed to determine the optimal ordering policies for the retailer under above conditions. These results help the retailer's decision makers to determine accurately the optimal cost. A numerical example demonstrates the applicability of the proposed method. Moreover, sensitivity analysis of the optimal solution with respect to major parameters is carried out. Finally, the results in this paper generalize some already published results.