An inventory model with stock-dependent demand under conditions of permissible delay in payments

Abstract

In the economic order quantity models, it is often assumed that the payment of an order is made on the receipt of items by the inventory system. Such assumption is usually not fulfilled in practice. The phenomenon that a supplier may offer a credit period to the retailers in order to stimulate demand is very common in the market. In this paper, the stock-dependent demand rate and conditions of permissible delay in payments used in conjunction with the economic order quantity model are the focus of discussion. We shall be concern with finding the optimal replenishment cycle under conditions of permissible delay in payments. Numerical examples are presented to illustrate the proposed models.