The EOQ Model for Deteriorating Items with a Conditional Trade Credit Linked to Order Quantity in a Supply Chain System

Kun-Jen Chung, Jui-Jung Liao, Hari Mohan Srivastava, Shih-Fang Lee and Shy- Der Lin
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Kun-Jen Chung: College of Business, Chung Yuan Christian University, Chung Li 320314, Taiwan
Jui-Jung Liao: Department of Business Administration, Chihlee University of Technology, Banqiao District, New Taipei City 22050, Taiwan
Hari Mohan Srivastava: Department of Mathematics and Statistics, University of Victoria, Victoria, BC V8W 3R4, Canada
Shih-Fang Lee: Department of Applied Mathematics, Chung Yuan Christian University, Chung Li 320314, Taiwan
Shy- Der Lin: Department of Applied Mathematics and Business Administration, Chung Yuan Christian University, Chung Li 320314, Taiwan

Mathematics, 2021, vol. 9, issue 18, 1-28

Abstract: For generality, we observed that some of the optimization methods lack the mathematical rigor and some of them are based on intuitive arguments which result in the solution procedures being questionable from logical viewpoints of a mathematical analysis such as those in the work by Ouyang et al. (2009). They consider an economic order quantity model for deteriorating items with partially permissible delays in payments linked to order quantity. Basically, their inventory models are interesting, however, they ignore explorations of interrelations of functional behaviors (continuity, monotonicity properties, differentiability, et cetera) of the total cost function to locate the optimal solution, so those shortcomings will naturally influence the implementation of their considered inventory model. Consequently, the main purpose of this paper is to provide accurate and reliable mathematical analytic solution procedures for different scenarios that overcome the shortcomings of Ouyang et al.

Keywords: inventory modeling; mathematical analytic solution procedures; economic order quantity (EOQ) model; deteriorating products; trade-credit financing; partially permissible delay in payments; object function (that is, total annual cost function); supply chain management (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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