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Author: | Kingsman, B.G. |
Title: | EOQ under data-terms supplier credit: a near-optimal solution |
Journal: | Journal of the Operational Research Society
1991 : SEP, VOL. 42:9, p. 803-809 |
Index terms: | INVENTORY CONTROL PURCHASING TRADE |
Language: | eng |
Abstract: | It is demonstrated that under date-terms supplier credit, making explicit the separate effects of carrying cost, the financing and other marginal holding costs, does not invalidate Kingsman's original result that the optimal order quantity is given by an integer multiple of monthly demands, provided the capital investment component of the inventory holding costs is equal to or greater than 30 p.c. of the component due to the physical holding of inventory. It is argued that the order quantity should be an integer fraction of a month's demand, provided that the capital investment component of the inventory holding charge is equal to or greater than one quarter of the component due to the physical holding of inventory. |
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