The Optimal Retailer’s Economic Production Quantity (EPQ) Policies with Two-Level Trade Credit under Alternate Due Date of Payment and Limited Storage Capacity

Authors

H. M. Srivastava, Department of Mathematics and Statistics, University of Victoria, Victoria, British Columbia V8W 3R4, Canada\\ Department of Medical Research, China Medical University Hospital, China Medical University, Taichung 40402, Taiwan, Republic of ChinaFollow
Ghi-Feng Yen, Department of Business Administration, Chung Yuan Christian University, Chung-Li 32023, Taiwan, Republic of ChinaFollow
An-Kuo Lee, Department of Business Administration, Chung Yuan Christian University, Chung-Li 32023, Taiwan, Republic of ChinaFollow
Yi-Xiu Wu, Department of Business Administration, Chung Yuan Christian University, Chung-Li 32023, Taiwan, Republic of ChinaFollow
Shy-Der Lin, Departments of Applied Mathematics and Business Administration, Chung Yuan Christian University, Chung-Li 32023, Taiwan, Republic of ChinaFollow

Author Country (or Countries)

Republic of China

Abstract

In recent years, many researchers investigated and developed the Economic Production Quantity (EPQ) model under permissible delay in payment. There are two payment terms which are usually being used. If a customer buys one item from a retailer at time t belonging to the time-interval [0,N], then the customer will have a trade-credit period N −t and will make the payment at time N. The other payment term (alternate due date) is when a customer buys one item from a retailer at time t belonging to [0,T], the customer will have a trade-credit period N and will make the payment at time N+t. This paper develops a two-level trade-credit model with a finite replenishment rate by considering an alternate due date of payment and limited storage capacity together. Four theorems are developed in this investigation with a view to characterizing the optimal solutions according to cost-minimization strategy. Finally, sensitivity analyses are executed to investigate the effects of the various parameters on the ordering policies and the annual total relevant costs. Several interesting results are also considered in order to make several managerial suggestions.

Digital Object Identifier (DOI)

http://dx.doi.org/10.18576/amis/120602

Recommended Citation

M. Srivastava, H.; Yen, Ghi-Feng; Lee, An-Kuo; Wu, Yi-Xiu; and Lin, Shy-Der (2018) "The Optimal Retailer’s Economic Production Quantity (EPQ) Policies with Two-Level Trade Credit under Alternate Due Date of Payment and Limited Storage Capacity," Applied Mathematics & Information Sciences: Vol. 12: Iss. 6, Article 2.
DOI: http://dx.doi.org/10.18576/amis/120602
Available at: https://digitalcommons.aaru.edu.jo/amis/vol12/iss6/2