Inventory Models Under Trade Credit And Time Value Of Money

Inventory is very important for enterprises in several aspects, such as maintain the normal production, keeping the goods continuing circulation and satisfying the stochastic demands of customers. However, the cost of the enterprise is increased by the inventory. Thus, the appropriate inventory must be considered by the enterprise managers. In the economic globalization today, the value of money tends to change over to time. Therefore, it is necessary to take the effect of the time value of money on the inventory policy into consideration.Several inventory models are presented, which include time value of money, partial permissible delay in payment, stock-dependent demand and trade credit depending on the order quantity. The purposes of the research are to cut down the cost of the retailers, guard against and defuse risks resulting from the time value of money. The details are given as follows.(1) The problem of inventory with deteriorating item is discussed under the conditions of partial trade credit and time value of money. Based on the influence of time to related costs for the retailer, an inventory model under two-level trade credit is established. The method for efficiently determining the optimal cycle time is presented. Meanwhile, numerical examples are given to demonstrate the model.(2) An inventory model for deteriorating item is developed, in which the demand of the item depends on the current inventory, two-level trade credit is employed and time value of money is considered. The aim is to minimize the present value of related costs for the retailer. A simple theorem is developed to show the existence of the optimal cycle time. Finally, numerical examples are given to validate the feasibility of the model. (3) The issue of inventory with time value of money is discussed based on trade credit depending on the order quantity. The minimization of the present value of the total future cash-flow cost is taken as the objective function, and some theorems are developed to determine the optimal cycle time for the retailer. Finally, the theoretical results are illustrated by numerical examples.The results obtained in this thesis not only can enrich the contents of researching on inventory models under two levels of trade credit and time value of money, but also may offer more sufficient theoretical evidence for inventory managers on the ordering decisions.