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An EOQ model for decaying item with full advanced payment and conditional discount

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Abstract

The classic economic order quantity model assumes that purchasing cost should be paid immediately after the delivery time. In practice, sometimes the vendors ask the buyers to prepay the entire or a percentage of the purchasing cost before delivery time. In this paper the buyer’s inventory control system for a decaying item under full prepayment scheme based on various conditions consisting of (1) no shortage, (2) full backordering shortage is allowed and (3) partial lost sale is permitted, are developed. Numerical analysis is provided to show the performance of the model and some managerial insights are presented based on the proposed solution technique and sensitivity analysis.

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Authors and Affiliations

  1. School of Industrial Engineering, College of Engineering, University of Tehran, Tehran, Iran

    Shayan Tavakoli & Ata Allah Taleizadeh

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  1. Shayan Tavakoli
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  2. Ata Allah Taleizadeh
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Correspondence to Ata Allah Taleizadeh.

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Tavakoli, S., Taleizadeh, A.A. An EOQ model for decaying item with full advanced payment and conditional discount. Ann Oper Res 259, 415–436 (2017). https://doi.org/10.1007/s10479-017-2510-7

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