Optimal Policy for EOQ Model with Two Level of Trade Credits in One Replenishment Cycle

Amit Sharma, Ruchi Goel, Naresh Kumar Dua

Department of Mathematics and Humanities, Sardar Vallabhbhai National Institute of Technology (SVNIT), Surat, India.
Department of Mathematics, Dev Nagri (Post Graduate) College, Meerut, India.
Department of Mathematics, PDM College of Engineering, Bahadurgarh, India.

DOI: 10.4236/ajor.2012.21006                

Abstract

In general, a supplier/retailer frequently offer trade credit to stimulate their respective sales. The main purpose of this paper is to investigate the optimal supplier/retailer’s replenishment decisions under two levels of trade credit policy within the economic order quantity (EOQ) framework. This paper deals with the supplier/retailer’s inventory replenishment problem under two levels of trade credit in one replenishment cycle. A different approach of two levels of trade credit is used, which give more freedom to the supplier/retailer in business. In addition, the easy-to-use procedure is developed to efficiently find the optimal cycle time for the retailer under minimizing annual total relevant cost. Finally, a numerical example is given to illustrate these results.

Keywords

EOQ Model; Inventory; Two Levels of Trade Credit, Replenishment Cycle

Conflicts of Interest

The authors declare no conflicts of interest.

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