Optimal lot-sizing policy for a manufacturer with defective items in a supply chain with up-stream and down-stream trade credits

In this paper, we establish an economic production quantity model for a manufacturer (or wholesaler) with defective items when its supplier offers an up-stream trade credit M while it in turn provides its buyers (or retailers) a down-stream trade credit N. The proposed model is in a general framework that includes numerous previous models as special cases. In contrast to the traditional differential calculus approach, we use a simple-to-understand and easy-to-apply arithmetic-geometric inequality method to find the optimal solution. Furthermore, we provide some theoretical results to characterize the optimal solution. Finally, several numerical examples are presented to illustrate the proposed model and the optimal solution.

[1]  J.-T. Teng,et al.  Optimal ordering policies for a retailer in a supply chain with up-stream and down-stream trade credits , 2007, J. Oper. Res. Soc..

[2]  J. Teng.  Optimal ordering policies for a retailer who offers distinct trade credits to its good and bad credit customers , 2009 .

[3]  Jinn-Tsair Teng,et al.  Optimal ordering policies when the supplier provides a progressive interest scheme , 2007, Eur. J. Oper. Res..

[4]  B. Sarker,et al.  An ordering policy for deteriorating items with allowable shortage and permissible delay in payment , 1997 .

[5]  Jui‐Jung Liao.  An EOQ model with noninstantaneous receipt and exponentially deteriorating items under two-level trade credit , 2008 .

[6]  Maw-Sheng Chern,et al.  Optimal manufacturer’s replenishment policies for deteriorating items in a supply chain with up-stream and down-stream trade credits , 2010 .

[7]  Jinn-Tsair Teng,et al.  Optimal manufacturer's replenishment policies in the EPQ model under two levels of trade credit policy , 2009, Eur. J. Oper. Res..

[8]  Jinn-Tsair Teng,et al.  Supply chain models for deteriorating products with ramp type demand rate under permissible delay in payments , 2011, Expert Syst. Appl..

[9]  Jinn-Tsair Teng,et al.  On the economic order quantity under conditions of permissible delay in payments , 2002, J. Oper. Res. Soc..

[10]  Yung-Fu Huang,et al.  Optimal retailer's replenishment policy for the EPQ model under the supplier's trade credit policy , 2004 .

[11]  Liang-Yuh Ouyang,et al.  An optimal replenishment policy for deteriorating items with stock-dependent demand and relaxed terminal conditions under limited storage space , 2011, Central Eur. J. Oper. Res..

[12]  Jinn-Tsair Teng.  A simple method to compute economic order quantities , 2009, Eur. J. Oper. Res..

[13]  Victor B. Kreng,et al.  The optimal replenishment decisions under two levels of trade credit policy depending on the order quantity , 2010, Expert Syst. Appl..

[14]  Jinn-Tsair Teng,et al.  A comprehensive extension of optimal ordering policy for stock-dependent demand under progressive payment scheme , 2011, Eur. J. Oper. Res..

[15]  Jinn-Tsair Teng,et al.  Inventory lot-Size Models under Trade Credits: a Review , 2008, Asia Pac. J. Oper. Res..

[16]  Leopoldo Eduardo Cárdenas-Barrón,et al.  The derivation of EOQ/EPQ inventory models with two backorders costs using analytic geometry and algebra , 2011 .

[17]  Chun-Tao Chang,et al.  The EOQ with defective items and partially permissible delay in payments linked to order quantity derived algebraically , 2012, Central Eur. J. Oper. Res..

[18]  S. Aggarwal,et al.  Ordering Policies of Deteriorating Items under Permissible Delay in Payments , 1995 .

[19]  Hardik N. Soni,et al.  Optimal ordering policy for stock-dependent demand under progressive payment scheme , 2008, Eur. J. Oper. Res..

[20]  L. Ouyang,et al.  Retailer’s optimal order and credit policies when a supplier offers either a cash discount or a delay payment linked to order quantity , 2013 .

[21]  Yung-Fu Huang,et al.  Economic order quantity under conditionally permissible delay in payments , 2007, Eur. J. Oper. Res..

[22]  Yung-Fu Huang,et al.  AN EOQ MODEL UNDER RETAILER PARTIAL TRADE CREDIT POLICY IN SUPPLY CHAIN , 2008 .

[23]  S. Goyal.  Economic Order Quantity under Conditions of Permissible Delay in Payments , 1985 .

[24]  Y.-F. Huang,et al.  Optimal retailer's ordering policies in the EOQ model under trade credit financing , 2003, J. Oper. Res. Soc..

[25]  Hark Hwang,et al.  Optimal pricing and ordering policies for retailers under order-size-dependent delay in payments , 2003, Comput. Oper. Res..

[26]  Victor B. Kreng,et al.  Optimal replenishment decision in an EPQ model with defective items under supply chain trade credit policy , 2011, Expert Syst. Appl..