EOQ Model with Cash Flow Oriented and Quantity Dependent Under Trade Credits (TECHNICAL NOTE)

Abstract

Inventory models in which the demand rate dependents on the stock- dependent are based on the common real- life observation that greater product availability tends to stimulate more sales. In this study we develop an inventory model to determine an optimal ordering policy for quantity dependent demand rate and time dependent holding cost items with delay in payments permitted by the supplier under inflation and time discounting. Mathematical models have been derived under two situations i.e. Case I: cycle time greater than or equal to permissible delay period. Case II: cycle time less than permissible delay period. In this mathematical model we obtain the optimal cycle time and optimal payment time so that the annual total relevant cost is minimized. Finally numerical example is given to illustrate the proposed model.