Mathematical Problems in Engineering
Volume 2007 (2007), Article ID 90873, 18 pages
doi:10.1155/2007/90873
Research Article
Retailer's EOQ Model with Limited Storage Space Under Partially
Permissible Delay in Payments
1Department of Marketing and Logistics Management, Chaoyang University of Technology, Wufong Township, Taichung County 41349, Taiwan
2Department of Business Administration, Chaoyang University of Technology, Wufong Township, Taichung County 41349, Taiwan
Received 6 September 2006; Revised 5 April 2007; Accepted 1 July 2007
Academic Editor: Jingshan Li
Copyright © 2007 Yung-Fu Huang et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract
The main purpose of this paper wants to investigate the optimal retailer's lot-sizing policy with
two warehouses under partially permissible delay in payments within the economic order quantity (EOQ) framework. In this paper,
we want to extend that fully permissible delay in payments to the supplier would offer the retailer
partially permissible delay in payments. That is, the retailer must make a partial payment to the supplier
when the order is received. Then the retailer must pay off the remaining balance at the end of the
permissible delay period. In addition, we want to add the assumption that the retailer's storage
space is limited. That is, the retailer will rent the warehouse to store these exceeding items when
the order quantity is larger than retailer's storage space. Under these conditions,
we model the retailer's inventory system as a cost minimization problem to determine the retailer's
optimal cycle time and optimal order quantity. Three theorems are developed to efficiently determine
the optimal replenishment policy for the retailer. Finally, numerical examples are given to
illustrate these theorems and obtained a lot of managerial insights.