An inventory model with deteriorating items under inflation when a delay in payment is permissible

This study develops an inventory model for initial-stock-dependent consumption rate when a delay in payment is permissible. In the inventory model, shortages are not allowed. The effect of the inflation rate, deterioration rate, initial-stock-dependent consumption rate and delay in payment are discu...

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Bibliographic Details
Published in:International journal of production economics 2000-01, Vol.63 (2), p.207-214
Main Authors: Liao, Hung-Chang, Tsai, Chih-Hung, Su, Chao-Ton
Format: Article
Language:English
Subjects:
Delay in payment
Deterioration
Inflation
Inventory
Inventory control
Mathematical models
Operations research
Studies
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Summary:This study develops an inventory model for initial-stock-dependent consumption rate when a delay in payment is permissible. In the inventory model, shortages are not allowed. The effect of the inflation rate, deterioration rate, initial-stock-dependent consumption rate and delay in payment are discussed. In the study, mathematical models are also derived under two different circumstances, i.e., Case I: The credit period is less than or equal to the cycle time for settling the account; and Case II: The credit period is greater than the cycle time for settling the account. Besides, expressions for an inventory system's total cost are derived for these two cases. Moreover, a computational procedure and GINO (Lasdon et al., ACM Transactions Mathematical Software 4 (1978) 34–50) are proposed to obtain the optimal order size and cycle time. The results can help managers determine the optimal total cost. Finally, a numerical example demonstrates the applicability of the proposed model.
ISSN:0925-5273
1873-7579
DOI:10.1016/S0925-5273(99)00015-8