International Journal of Applied Mathematics and Machine LearningAuthor's: Gour Chandra Mahata and Sujit Kumar De
Pages: [99] - [113]
Received Date: September 28, 2016
Submitted by: Jianqiang Gao.
DOI: http://dx.doi.org/10.18642/ijamml_7100121723
In this paper, we propose an economic order quantity model of a retailer for deteriorating items with default risk consideration. The demand is assumed as a function of inventory level and credit period. The objective is to find the retailer’s optimal credit period and cycle time while maximizing profit per unit time. For any given credit period, we first prove that the optimal cycle time not only exists, but is also unique in some conditions. Second, we show how the optimal credit period for any given replenishment cycle can be decided. Furthermore, we use the Lingo to obtain global maximum solutions to the optimal cycle time and the optimal credit period for the proposed model. Sensitivity analysis is conducted to provide some managerial insights.
inventory, deteriorating items, trade credit, supply chain management.
