A Cash Flow Oriented EOQ Model with Time Dependent Demand Rate Under Permissible Delay in Payments

Abstract

In this study inventory model is developed to determine an optimal ordering policy for deteriorating items and time-dependent demand rate with permissible delay in payments. The effects of inflation and time discounting are taken into account. Mathematical models have been derived under two different situations, i.e. Case I: The permissible delay period is less than cycle time for settling the account, and Case II: The permissible delay period is greater than cycle time for settling the account. In this study, we determine the optimal cycle time and optimal payment time for item so that the annual total cost is minimized. The numerical example is given to support the development of the mathematical model.