Abstract
This paper presents an inventory model with linearly time dependent rate and shortages under trade credits. We show that the total cost per unit is convex function of time. Some properties have also been discussed based an optimal solution. The results are discussed with the help of numerical examples. Sensitivity analyses with a variety of numerical results showing the effect of model parameters on key performance measures are demonstrated. Mathematica 7 software is used for finding numerical solutions.
Highlights
The classical inventory analysis assumes that the supplier is part for the item as soon as the retailer receives the items
The effect of the trade credit on the optimal inventory policy is examined by several researchers like Bregman (1993; Chapman and Ward, 1988; Ward and Chapman, 1987: Daellenbach, 1986; Chapman et al, 1985; Kingsman, 1983; Davis and Gaither, 1985; Haley and Higgins, 1973)
Chung (1989) developed the Discounted Cash Flows (DCF) approach for the analysis of the optimal inventory is the presence of trade credit
Summary
The classical inventory analysis assumes that the supplier is part for the item as soon as the retailer receives the items. Jaggi et al (2013) developed an EOQ based inventory model for imperfect quantity items to determine the optimal ordering policies of a retailer under permissible delay in payments with allowable shortages. Change in purchase cost leads negative change in T = T**, T = T1**, Q = Q1** and Z1 (T*, T1*) From Table 8: Increase of credit period ‘m’ results slight decrease in optimal cycle time T = T**, value of T1**, optimal order quantity Q = Q2** and decrease in total relevant cost Z2 (T**,T1**).
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