In this paper, we amend Chung and Huang’s model (2003) by considering the following two important facts: (1) the retailer’s selling price per unit is necessarily higher than its unit cost, and (2) the interest rate charged by a supplier or a bank is not necessary higher than the retailer’s investment return rate. In addition, we extend the model to allow for deteriorating items under permissible delay in payments, and consider two possible ways for the retailer to pay off the loan. We then provide easy-to-use algorithms to find the optimal order receipt period and the optimal cycle time. Some numerical examples are presented to illustrate the proposed model. In addition, we make the sensitivity of parameters on the optimal solution and propose economic interpretation.
Relation:
2005年管理科學與經營決策國際學術研討會論文集=Proceedings of the 2005 International Conference in Management Sciences and Decision Making, pp.239-267
