A Periodic Review Inventory Model for Weibull Deteriorating Items under Trade Credit Offer Using Discounted Cash-Flow Approach

Authors

  • Jhantu Pal Bijoy Krishna Girls’ College-Howrah, Howrah, India
  • Manisha Pal Department of Statistics, University of Calcutta, Kolkata, India

Keywords:

Periodic review model, Weibull deterioration, progressive payment scheme, time value of money

Abstract

The paper considers a periodic review inventory model for items having deterioration time distributed as two-parameter Weibull. The inventory manager is offered progressive trade credit whereby if the manager pays his dues within the first credit period, he does not have to pay any interest. However, he is charged an interest on the unpaid balance if he pays in the second credit period and the interest is increased if he pays beyond that period. The model is analyzed using the discounted-cash-flow approach, and the optimal stock height and cycle length are determined so as to minimize the present value of all future cash out-flows. Numerical examples are cited, and a sensitivity analysis is carried out to study how robust the model is to change in the parameter values.

Author Biography

Manisha Pal, Department of Statistics, University of Calcutta, Kolkata, India

The paper considers a periodic review inventory model for items having deterioration time distributed as two-parameter Weibull. The inventory manager is offered progressive trade credit whereby if the manager pays his dues within the first credit period, he does not have to pay any interest. However, he is charged an interest on the unpaid balance if he pays in the second credit period and the interest is increased if he pays beyond that period. The model is analyzed using the discounted-cash-flow approach, and the optimal stock height and cycle length are determined so as to minimize the present value of all future cash out-flows. Numerical examples are cited, and a sensitivity analysis is carried out to study how robust the model is to change in the parameter values.

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Published

2020-03-20

How to Cite

Pal, J. ., & Pal, M. . (2020). A Periodic Review Inventory Model for Weibull Deteriorating Items under Trade Credit Offer Using Discounted Cash-Flow Approach. Thailand Statistician, 18(2), 165–175. Retrieved from https://ph02.tci-thaijo.org/index.php/thaistat/article/view/240227

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Section

Articles