Abstract
This paper deals with continuous review inventory policy under permissible delay in payments with investment for quality improvement and ordering cost reduction. The supplier offers a credit period that is less than the average duration of the inventory model. The lead time of receiving products from the vendor to a buyer is a variable which is controllable by adding extra crashing cost. A mathematical model is derived to investigate the effects of ordering cost reduction, permissible delay in payments and investment for quality improvement and it can be achieved by optimising the order quantity, lead time and total number of deliveries in one production run simultaneously with the objective of minimising joint expected total cost (JETC). Furthermore, the sensitivity analysis is included and the numerical examples are given to illustrate the results. Finally, graphical representation is presented to illustrate the model.
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