An EOQ model with backordering for perishable items under multiple advanced and delayed payments policies

Abstract

This study investigated an economic order quantity (EOQ) model with complete backorder for fixed lifetime perishable items under multiple advance and delayed payments policies. Here, a new type of business policy is considered where supplier offers the retailer to pay a fraction of the purchasing cost before the order delivery by multiple equal installments starting from the ordering time and the rest amount after the delivery by multiple equal installments. Here, some theoretical results are illustrated to determine the conditions of existence and uniqueness of the optimal solutions. A closed form solution is determined to solve the proposed model under approximation. Some numerical examples are provided to examine the validity of the proposed model. Finally, sensitivity analyses are presented to obtain the effect of optimal policy and provide some managerial insights of the model.

Keywords:

• inventory
• perishable item
• expiry date
• advance payment
• delayed payment

Acknowledgments

The authors express their sincere thanks to the editor and the anonymous reviewers for their valuable and constructive comments and suggestions which have led to a significant improvement of the manuscript.

Disclosure statement

The authors declare that they have no conflict of interest.