Optimal Ordering and Trade Credit Policy for EOQ Model

Hardik Soni and Nita H. Shah ()
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Nita H. Shah: Gujarat University, Ahmedabad – 80009, Gujarat, India.

Indus Journal of Management & Social Science (IJMSS), 2008, vol. 2, issue 1, 66-76

Abstract: Trade credit is the most prevailing economic phenomena used by the suppliers for encouraging the retailers to increase their ordering quantity. In this article, an attempt is made to derive a mathematical model to find optimal credit policy and hence ordering quantity to minimize the cost. Even though, credit period is offered by the supplier, both parties (supplier and retailer) sit together to agree upon the permissible credit for settlement of the accounts by the retailer. A numerical example is given to support the analytical arguments.

Keywords: Trade Credit; Optimal ordering quantity; Lot-size (search for similar items in EconPapers)
JEL-codes: C02 C61 (search for similar items in EconPapers)
Date: 2008
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