Title: An economic order quantity model for deteriorating items with trended demand under inflation, time discounting and a trade credit policy

Authors: Swapan Kumar Manna; Chih-Cheng Lee; K.S. Chaudhuri

Addresses: Department of Mathematics, Narasinha Dutt College, Howrah-711104, WB, India ' Department of Information Management, National United University, Miaoli, Taiwan ' Department of Mathematics, Jadavpur University, Kolkata-700032, India

Abstract: This paper discusses an inventory model based on the discounted cash flows (DCF) approach for the analysis of the optimal ordering policies in presence of inflation and trade-credit policy of the type α/T1 net T. The effects of deterioration and time-value of money are also taken into account. The demand rate is assumed to be linearly trended over time. The results are illustrated with a numerical example. Optimal present worth of all future cash flows in discount case is economically beneficial. Sensitivity analysis of the optimal solution with respect to changes in the parameters of the system is carried out.

Keywords: deterioration; trended demand; inflation; trade credit policy; economic order quantity; EOQ model; deteriorating items; time discounting; inventory modelling; discounted cash flow; DCF.

DOI: 10.1504/IJAOM.2013.058889

International Journal of Advanced Operations Management, 2013 Vol.5 No.4, pp.320 - 336

Received: 01 May 2012
Accepted: 13 Feb 2013

Published online: 27 Jan 2014 *

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