An EOQ model under supplier trade credit policy depending on the order quantity

Abstract

In 1985, Goyal considered the retailer's inventory replenishment problem under permissible delay in payments independent of the order quantity and the retailer's unit selling price and the purchasing price per unit were equal. In this paper, the restrictive assumptions of the trade credit independent of the order quantity and the retailer's unit selling price equaled to the purchasing price per unit are relaxed. This paper investigates the retailer's inventory problem under permissible delay in payments dependent of the order quantity and the retailer's unit selling price not necessarily equals to the purchasing price per unit within the economic order quantity (EOQ) framework. Four easy-to-use theorems present solution procedures to locate the optimal cycle time of the annual total relevant cost function. Finally, numerical examples are given to illustrate all theorems obtained in this paper.