Net Present Value Maximizing Inventory Analysis with Two Product Types and Credit Facilities

Posted: 2 May 2014 Last revised: 14 Jul 2014

See all articles by Mahmoud Arayssi

Mahmoud Arayssi

Lebanese American University

Noura Yassine

Beirut Arab University

Date Written: April 30, 2014

Abstract

The classic economic order quantity inventory model assumes that all items received from a seller are perfect in quality. Payment for the items is presumed made at the inventory cycle’s start, when the materials are received. This paper considers a system of inventory control where we receive two types of materials, perfect and less than perfect. In addition, a credit facility in paying for the raw materials exists. The percentage of perfect quality items is assumed to be distributed randomly. A case study illustrates the mathematical model showing the best order quantity.

Keywords: economic order quantity, imperfect quality items, continuous demand, cash discount, permissible delay in payment

JEL Classification: G30

Suggested Citation

Arayssi, Mahmoud and Yassine, Noura, Net Present Value Maximizing Inventory Analysis with Two Product Types and Credit Facilities (April 30, 2014). Available at SSRN: https://ssrn.com/abstract=2431112

Mahmoud Arayssi (Contact Author)

Lebanese American University

P.O.Box 36
Chouran-Beirut 1102 2801
Byblos
Lebanon

Noura Yassine

Beirut Arab University ( email )

Beirut
Tarik Al Jadidah
Beirut
Lebanon

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
644
PlumX Metrics