Title: A multiproduct EOQ model with permissible delay in payments and shortage within warehouse space constraint: a genetic algorithm approach

Authors: Seyed Hamid Reza Pasandideh; Seyed Taghi Akhavan Niaki; Mohammad Hemmati Far

Addresses: Department of Industrial Engineering, Faculty of Engineering, Kharazmi University, Tehran, Iran ' Department of Industrial Engineering, Sharif University of Technology, Tehran, Iran ' Department of Mechanical and Industrial Engineering, Qazvin Islamic Azad University, Qazvin, Iran

Abstract: In today's business transactions, sometimes customers are allowed to pay in a grace period, i.e., permissible delay in payment occurs. This policy is advantageous both for the suppliers and for the customers. This paper formulates a multi-product economic order quantity (EOQ) problem with an order-quantity-dependent permissible delay in payment. In this problem, the shortage is backlogged and there is a warehouse constraint. We show that the model of the problem is a constrained nonlinear-integer-program and propose a genetic algorithm (GA) to solve it. Moreover, a statistical approach is employed to calibrate the parameters of the GA. A numerical example is presented at the end to not only demonstrate the application of the proposed parameter-tuned GA, but also to verify the results and to show GA performs better than a simulated annealing (SA) approach.

Keywords: economic order quantity; multiproduct EOQ; permissible delay; payment delays; shortage backlogging; warehouse space constraints; genetic algorithms; simulated annealing; nonlinear integer programming; NLIP.

DOI: 10.1504/IJMOR.2017.083188

International Journal of Mathematics in Operational Research, 2017 Vol.10 No.3, pp.316 - 341

Received: 21 Feb 2015
Accepted: 05 Jun 2015

Published online: 22 Mar 2017 *

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