Inventory ordering policies of delayed deteriorating items under permissible delay in payments

The existing literature on inventory of deteriorating items considers deterioration to begin as soon as the items are stocked. However, there are several deteriorating items that do not start deteriorating immediately they are held in stock. Some farm produce like potatoes, yams and even some fruits...

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Bibliographic Details
Published in:International journal of production economics 2012-03, Vol.136 (1), p.75-83
Main Authors: Musa, Abubakar, Sani, Babangida
Format: Article
Language:English
Subjects:
Delayed deterioration
Demand
Deterioration
Economics
Inventories
Inventory
Inventory management
Marketing
Mathematical models
Operations research
Order quantity
Permissible delay in payment
Policies
Stockpiling
Studies
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Summary:The existing literature on inventory of deteriorating items considers deterioration to begin as soon as the items are stocked. However, there are several deteriorating items that do not start deteriorating immediately they are held in stock. Some farm produce like potatoes, yams and even some fruits and vegetables have this property. Depletion of these items as soon as they are stocked will depend on demand, and when deterioration begins, it will depend on both demand and deterioration. In this paper, we develop a mathematical model on the inventory of deteriorating items that do not start deteriorating immediately they are stocked. The model also takes into cognizance the fact that in business activities nowadays customers are given some allowed period within which to settle for the goods supplied to them. They can use the accrued money from sales of the supplied goods to earn interest within the allowed period. They are charged interest only when they fail to settle the amount they owe the supplier at the end of the allowed period.
ISSN:0925-5273
1873-7579
DOI:10.1016/j.ijpe.2011.09.013