Economic order quantity of deteriorating items under permissible delay in payments

Scope and purpose This paper considers the inventory model of deteriorating items under permissible delay in payments. Traditionally, it is well known that the total variable cost function based on average cost analysis is convex. So, the study of the convexity of the total variable cost function should be one of the main research topics of the inventory model. The main purpose of this paper is to investigate the properties of the convexity of the total variable cost function of the inventory model of the deteriorating items under a permissible delay in payments. The economic ordering policy of deteriorating items under a permissible delay in payments is presented in this paper. The inventory system discussed here is the same as that of Aggarwal and Jaggi [Aggarwal, S. P. and Jaggi, C. K., Journal of the Operational Research Society, 1995, 46, 658–662.]. At first, this paper shows that the total variable cost per unit time is piecewise-convex. Then, with the piecewise convexity, a solution procedure is developed to improve that described by Aggarwal and Jaggi. Numerical examples are also given to illustrate the solution procedure.