A lot sizing model with partial downstream delayed payment, partial upstream advance payment, and partial backordering for deteriorating items

Ali Diabat, Ata Allah Taleizadeh, Mohsen Lashgari

Research output: Contribution to journalArticle

Abstract

In practice, installment of cost of lots is very common between manufacturers and distributors, and many distributors pay the purchasing cost in equal installments (i.e., an upstream partial prepayment). In a similar fashion, distributors allow retailers to pay the cost of purchased goods after such goods are received (i.e., a downstream partial delay payment). In this research we apply a model of economic order quantity (EOQ) in supply chains with partial downstream delayed payment and partial upstream advance payment for a deteriorating item under three conditions: 1) shortage is not allowed, 2) full back ordering is allowed, and 3) partial back ordering is allowed. We prove the convexity of the cost functions and derive closed form global optimal solutions for the decision variables of all models. Eventually, to demonstrate the theoretical results and managerial options, we perform some computational examples.

Original languageEnglish (US)
Pages (from-to)322-342
Number of pages21
JournalJournal of Manufacturing Systems
Volume45
DOIs
StatePublished - Oct 2017

Keywords

  • Advance payment
  • Deteriorating items
  • Lot sizing
  • Trade credit

ASJC Scopus subject areas

  • Software
  • Control and Systems Engineering
  • Hardware and Architecture
  • Industrial and Manufacturing Engineering

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