EPQ Policies Considering the Holding Cost of Raw Materials under Conditions of Two-Level Trade Credit and Limited Storage Capacity - Open Access Library Journal

OALibJ > Vol.6 No.1, January 2019

EPQ Policies Considering the Holding Cost of Raw Materials under Conditions of Two-Level Trade Credit and Limited Storage Capacity ()

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DOI: 10.4236/oalib.1105140 436 Downloads 1,081 Views Citations

Author(s)

Ghi-Feng Yen¹, Shy-Der Lin², An-Kuo Lee¹

Affiliation(s)

¹Department of Business Administration, Chung Yuan Christian University, Taoyuan.
²Department of Applied Mathematics, Chung Yuan Christian University, Taoyuan.

ABSTRACT

The economic production quantity model is widely used as a decision making tool. However, climate change and energy supply instability have raised the transport costs of raw materials, thereby affecting production costs. Therefore, this paper presents a new model that considers the holding costs of raw materials under conditions of two-level trade credit and limited storage capacity. Four theorems are developed to characterize the optimal solutions according to a cost-minimization strategy. Finally, a sensitivity analysis is executed to investigate the effects of the various parameters on ordering policies and the annual total relevant costs.

KEYWORDS

Economic Production Quantity (EPQ), Raw Materials, Trade Credit, Limited Storage Capacity

Share and Cite:

Yen, G. , Lin, S. and Lee, A. (2019) EPQ Policies Considering the Holding Cost of Raw Materials under Conditions of Two-Level Trade Credit and Limited Storage Capacity. Open Access Library Journal, 6, 1-24. doi: 10.4236/oalib.1105140.

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