Literature Review On Inventory Management

Literature Review On Inventory Management-88
His paper is the base for many papers published thereafter.Dave [9] reformulated Goyal’s [7] model by considering different selling and purchasing prices.

This is an agreement where the vendor and buyer agree upon a predetermined period, so-called credit period, during which the buyer pays to the vendor at the time of selling or using the items.

Based on the vendor and buyer contract, at the end of this period, the latter must pay either for the remaining items in inventory, return them to the vendor, or pay for the interest charged (Figure 2).(III) Pay after a Predefined Period.

A conclusion of the paper is provided in Section 6.

Trade credit was first discussed by Haley and Higgins [5] who examined the effect of a two-part trade credit policy with a cash discount on the optimal inventory policy and payment time.

Different types of delay in payment can be extracted from the literature. [2] classified these types under consignment inventory (CI) contract into four groups;(I) Pay as Sold/Used.

In this type of contract which is shown in Figure 1 the buyer must pay for the received goods from the vendor as soon as he uses or sells them to his own customers.(II) Pay as Sold/Used during a Predefined Period.

Teng [24] modified Goyal [7]’s model by differentiating between the unit purchase cost and selling price and concluded that some retailers may order less quantity and benefit from the permissible delay more frequently. [25] generalized Goyal’s [7] model by assuming two-part trade credit.

Considering equal interest earned and charged, Abad and Jaggi [27] developed a model of seller-buyer relationship under cooperative and noncooperative structures with price-dependent demand to find the optimal policies of the seller (selling price and credit period) and the buyer (unit price and replenishment cycle).

However, this suggestion did not receive the proceeding researches’ attention for about two decades.

Chung [16] simplified the solution procedure proposed in Goyal [7] by presenting a simple procedure to determine the optimal time interval between successive orders.


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