EOQ and Optimal Credit Time Under Conditions of Permissible Delay in Payments

This paper analyzes a simple supply chain consisting of a retailer and a supplier, the latter permits the former a certain fixed period to settle the amount owed to him for the items supplied. Many researches have developed various economic order quantity (EOQ) for the retailer under the assumption that the resale price is equal to the wholesale price. We establish the retailer´s EOQ model when considering the difference between the resale price and the wholesale price. We then characterize the optimal credit time for the supplier under these conditions.