This study develops an inventory model for determining an optimal ordering policy for non-deteriorating items and time-dependent holding cost with delayed payments permitted by the supplier under inflation and time-discounting. The discounted cash flows approach is applied to study the problem analysis. | Yugoslav Journal of Operations Research 23 (2013) Number 3, 419-429 DOI: INVENTORY MODEL WITH CASH FLOW ORIENTED AND TIME-DEPENDENT HOLDING COST UNDER PERMISSIBLE DELAY IN PAYMENTS Graphic Era Univeristy, Dehradun (UK) INDIA tripathi_rp0231@ Received: Oktobar 2012 / Accepted: January 2013 Abstract: This study develops an inventory model for determining an optimal ordering policy for non-deteriorating items and time-dependent holding cost with delayed payments permitted by the supplier under inflation and time-discounting. The discounted cash flows approach is applied to study the problem analysis. Mathematical models have been derived under two different situations . case I: The permissible delay period is less than cycle time for settling the account, and case II: The permissible delay period is greater than or equal to cycle time for settling the account. An algorithm is used to obtain minimum total present value of the costs over the time horizon H. Finally, numerical example and sensitivity analysis demonstrate the applicability of the proposed model. The main purpose of this paper is to investigate the optimal cycle time and optimal payment time for an item so that annual total relevant cost is minimized. Keywords: Inventory, time-dependent, cash flow, delay in payments. MSC: 90B05. 1. INTRODUCTION In traditional economical ordering quantity (EOQ) model, it is assumed that retailer must pay for the items as soon as the items are received. However, in practice, the supplier may offer the retailer a delay period in paying for the amount of purchasing cost. To motivate faster payment, stimulate more sales or reduce credit expanses, the supplier also often provides its customers a cash discount. The permissible delay is an important source of financing for intermediate purchasers of goods and services. The permissible delay in payments reduces the buyer’s cost of holding stock, because it reduces the . .
