Author(s)

Ghi-Feng Yen¹, Shy-Der Lin², An-Kuo Lee¹

¹Department of Business Administration, Chung Yuan Christian University, Taoyuan.
²Department of Applied Mathematics, Chung Yuan Christian University, Taoyuan.

The traditional Economic Production Quantity (EPQ) model focused on production process, used the ordering cost that includes relevant costs during the pre-production process. But, the ordering cost comprises the holding of raw materials that would affected by other factors would increase the total relevant cost, it cannot simply use the ordering cost to cover all. Therefore, this paper presents a new inventory model by considering the holding of raw materials under conditions of two-level trade credit under alternate due date of payment and limited storage capacity. According to cost-minimization strategy it develops four theorems to characterize the optimal solutions. Finally, it executes the sensitivity analysis and investigates the effects of the parameters in the annual total relevant costs.

EPQ, Raw Materials, Alternate Due Date of Payment, Trade Credit, Limited Storage Capacity

Yen, G. , Lin, S. and Lee, A. (2018) EPQ Policies Considering the Holding Cost of Raw Materials with Two-Level Trade Credit under Alternate Due Date of Payment and Limited Storage Capacity. Open Access Library Journal, 5, 1-27. doi: 10.4236/oalib.1105041.