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http://dx.doi.org/10.17703/JCCT.2019.5.1.353

An Inventory Model for Deteriorating Products with Ordering Cost inclusive of a Freight Cost under Trade Credit  

Shinn, Seong-Whan (Dept. of Advanced Materials & Chemical Engineering, Halla Univ)
Publication Information
The Journal of the Convergence on Culture Technology / v.5, no.1, 2019 , pp. 353-360 More about this Journal
Abstract
Trade credit is being used as a price discrimination strategy by the suppliers in order to increase the customer's demand. From the viewpoint of the customer, if delayed payment is allowed for a certain period of time from the supplier, the effect of reducing the inventory carrying cost will positively affect the customer's order quantity. Also, in deriving the economic order quantity(EOQ) formula, it is tacitly assumed that the customer's ordering cost is a fixed cost. However in many business transactions, the customer pays the freight cost for the transportation of his order and so, the customer's ordering cost contains not only a fixed cost but also a freight cost which is a function of the order size. Therefore, in this study, we analyzed the inventory model which considers that the customer's ordering cost contains not only a fixed cost but also a freight cost which is a function of the customer's order size when the supplier permits a delay in payments. For the analysis, it is also assumed that inventory is exhausted not only by customer's demand but also by deterioration. Investigation of the properties of an optimal solution allows us to develop an algorithm whose validity is illustrated using an example problem.
Keywords
Inventory; EOQ; Credit Period; Freight Cost; Deterioration;
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Times Cited By KSCI : 1  (Citation Analysis)
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