Title: Inventory model under permissible delay in payments and inflation with generalised Pareto lifetime
Authors: K. Srinivas Rao; S. Eswara Rao
Addresses: Department of Statistics, Andhra University, Visakhapatnam, 530003, India ' Department of Computer Science, GITAM University, GIS, IT Building, Visakhapatnam, 530045, India
Abstract: Inventory models play a dominant role in analysing many practical situations arising at places like, food and vegetable markets, market yards, warehouses, oil exploration industries, etc. In this paper we develop and analyse an EOQ model for deteriorating items with permissible delay in payments under inflation. Here, it is assumed that the demand is a function of both time and selling price. It is further assumed that the lifetime of commodity is random and follows a generalised Pareto distribution. Using the differential equations the instantaneous state of inventory is derived. With suitable cost considerations the total cost function, net profit rate function are obtained. By maximising the net profit rate function the optimal ordering quantity and optimal selling price are derived. The sensitivity of the model with respect to the costs and parameters is studied. It is observed that this model includes several of the earlier models as particular cases for specific values of the parameters.
Keywords: generalised Pareto lifetime; permissible delays; purchasing power; time; optimal selling price; payments; inflation; EOQ; inventory modelling; economic order quantity; deteriorating items; perishable goods; random commodity lifetime; differential equations; instantaneous states; costs; cost function; net profit rate function; optimal ordering quantity; model sensitivity; payment delay.
International Journal of Procurement Management, 2015 Vol.8 No.1/2, pp.202 - 226
Available online: 11 Dec 2014 *Full-text access for editors Access for subscribers Purchase this article Comment on this article