Multi-item, economic order quantity model with permissible delay in payments and a budget constraint

Srimathy Mohan, Mohan Gopalakrishnan, Ashok Chandrasekhar

Research output: Contribution to journalArticle

20 Scopus citations

Abstract

This paper investigates the optimal replenishment policy for multi-item ordering under the conditions of permissible delay in payment, a budget constraint and permissible partial payment at a penalty. Such conditions exist in the use of purchase cards to order merchandise directly from the supplier. The paper presents mathematical models and closed form solutions for three situations - permissible delay is negative (payment made before receipt of good), is less than the replenishment interval and is greater than the replenishment interval. The analyses indicate that it is more economical for the purchaser to make entire payments even when the interest earned is greater than the interest charged.

Original languageEnglish (US)
Pages (from-to)446-460
Number of pages15
JournalEuropean Journal of Industrial Engineering
Volume2
Issue number4
DOIs
StatePublished - May 1 2008

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Keywords

  • Budget restriction
  • Inventory
  • Multi-item EOQ
  • P-cards
  • Permissible delay in payment
  • Procurement cards
  • Supplier credit

ASJC Scopus subject areas

  • Industrial and Manufacturing Engineering

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