The optimal ordering policy of the EOQ model under trade credit depending on the ordering quantity from the DCF approach

This paper discusses the optimum order quantity of the EOQ model that is not only dependent on the inventory policy but also on firm’ credit policy. Here, the conditions of using a discounted cash-flows (DCF) approach and trade credit depending on the quantity ordered are discussed. We consider that...

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Bibliographic Details
Published in:European journal of operational research 2009-07, Vol.196 (2), p.563-568
Main Authors: Chung, Kun-Jen, Liao, Jui-Jung
Format: Article
Language:English
Subjects:
Applied sciences
Credit policy
Discounted cash flow
Discounted cash-flows (DCF)
Discounted cash-flows (DCF) Trade credit Inventory
Exact sciences and technology
Inventory
Inventory control
Inventory control, production control. Distribution
Operational research and scientific management
Operational research. Management science
Optimization techniques
Order quantity
Portfolio theory
Studies
Trade credit
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Summary:This paper discusses the optimum order quantity of the EOQ model that is not only dependent on the inventory policy but also on firm’ credit policy. Here, the conditions of using a discounted cash-flows (DCF) approach and trade credit depending on the quantity ordered are discussed. We consider that if the order quantity is less than at which the delay in payments is permitted, the payment for the item must be made immediately. Otherwise, the fixed trade credit period is permitted. This paper incorporates all concepts of a discounted cash-flows (DCF) approach, trade credit and the quantity ordered and develops a new inventory model to generalize Chung [Chung, K.H., 1989. Inventory control and trade credit revisited, Journal of the Operational Research Society 40, 495–498].
ISSN:0377-2217
1872-6860
DOI:10.1016/j.ejor.2008.04.018