An EOQ Model with Ordering Cost inclusive of a Freight Cost under Condition of Permissible Delay in Payments
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As an effective means of price discrimination, some suppliers offer credit periods to the customers in order to stimulate the demand for the product they produce. Since the availability of the credit period from the supplier may be an effective means of reducing the cost of holding stocks, it has a positive effect on the customer's order quantity. Also, in many common business transactions, the customer pays the freight cost for the transportation of the order and therefore, the customer's ordering cost contains not only a fixed cost but also a freight cost which is a function of the order size. In this regard, this paper deals with the problem of determining the customer's EOQ (economic order quantity) under condition of permissible delay in payments. It is also assumed that the ordering cost of the customer contains not only a fixed cost but also a freight cost which constitutes a fixed charge for each extra unit load required. Investigation of the properties of an optimal solution allows us to develop an algorithm whose validity is illustrated using an example problem.
Abstract
As an effective means of price discrimination, some suppliers offer credit periods to the customers in order to stimulate the demand for the product they produce. Since the availability of the credit period from the supplier may be an effective means of reducing the cost of holding stocks, it has a positive effect on the customer's order quantity. Also, in many common business transactions, the customer pays the freight cost for the transportation of the order and therefore, the customer's ordering cost contains not only a fixed cost but also a freight cost which is a function of the order size. In this regard, this paper deals with the problem of determining the customer's EOQ (economic order quantity) under condition of permissible delay in payments. It is also assumed that the ordering cost of the customer contains not only a fixed cost but also a freight cost which constitutes a fixed charge for each extra unit load required. Investigation of the properties of an optimal solution allows us to develop an algorithm whose validity is illustrated using an example problem.
참고문헌 (15)
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