An EOQ Model With Delay In Payments And Stock Dependent Demand And Backlogging

In human social activities of the production, economy and trade, the inventory isindispensable, however too much inventory will result in the waste of materials andliquidity occupation, affecting reproduction of society. How to control with supply ofinventory scientifically and reasonablly will have an important practical value.In the classical EOQ model, we have generally assumed that when the supplierprovide goods to the retailer, the retailer receives the goods on payment of theappropriate fee immediately, that is to say" the buyer must pay for the items as soon asthe items were received," However, in real life, in order to stimulate the order quantityfrom the retailer, accelerate the flow of funds, suppliers will allow retailers to get thegoods without payment immediately but offer the retailer a delay period,nanmely,thetrade credit period. The delay in payments will have some impact on the cost structurefor suppliers and retailers, as rational decision-makers, suppliers and retailers need tooptimize decision to maximize profits.On the basis of delay in payments, this paper summarizes the experience of previousstudies, studing inventory model based on two aspects extension that a shortage of fullysupply and a shortage of parts supply, demand depends on the current inventory levelsand allow delay in payments that model is closer to reality. Extension of two casesperiod allowed for delay in payments, one is located in the inventory period, the other islocated in the shortage period, with the objective of maximize average total profit forretailer, these two models based on two cases of deadline of delay in payment anddetermine the optimal replenishment cycle and retailers optimal shortage of timeseparately, making the retailer obtain the optimal average total profit that have a certaintheory practice value.