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Supplier Credit in the Economic Order Quantity Model

James M. Wilson (Glasgow Business School, Glasgow University, Scotland)

International Journal of Operations & Production Management

ISSN: 0144-3577

Article publication date: 1 September 1991

Abstract

The standard economic order quantity model assumes that stocks are paid for when delivered. Supplier credit is widely available and can have considerable impact on holding costs and on the optimal order quantities. A simple extension to the standard economic order quantity model yields significant savings for items which have order cycles that are short relative to the period allowed for payment. The analysis also increases the attractiveness of joint replenishment models and highlights some difficulties of applying discrete demand models.

Keywords

Citation

Wilson, J.M. (1991), "Supplier Credit in the Economic Order Quantity Model", International Journal of Operations & Production Management, Vol. 11 No. 9, pp. 64-71. https://doi.org/10.1108/EUM0000000001286

Publisher

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MCB UP Ltd

Copyright © 1991, MCB UP Limited