Modified EOQ-Formula for Deferred Order Payments and Delays in Receipt of Revenue
Abstract: The purpose of the article is to analyse strategy optimization of inventory management taking into account the possibility of deferred payments, delays in receiving revenue and restrictions on vehicle capacity. The study is based on the development of a modification of the multiproduct EOQ-model factoring in: 1) time value of money; 2) possibility of deferred payment negotiated in advance of the order; 3) specific nature of incoming payments, when receipt of revenues from the goods happens after the moment of their delivery; 4) vehicle capacity; 5) situation when the company pays for its orders using the revenues from the goods delivered.
Taking above factors into account, this Article established the necessary and sufficient conditions that must be imposed on the length of the deferred payment for the order, as well as the allowable delay in payment for the goods so that it is possible to make the required payments from the proceeds. Corresponding principles are then demonstrated on a practical case.
The use of scientific developments of this Article will allow to 1) take into account all the above-mentioned features of the supply chain; 2) and to improve the efficiency of inventory management systems when it is necessary to take into account these features.