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A multiproduct EOQ model with permissible delay in payments and shortage within warehouse space constraint: a genetic algorithm approach

Author

Listed:
  • Seyed Hamid Reza Pasandideh
  • Seyed Taghi Akhavan Niaki
  • Mohammad Hemmati Far

Abstract

In today's business transactions, sometimes customers are allowed to pay in a grace period, i.e., permissible delay in payment occurs. This policy is advantageous both for the suppliers and for the customers. This paper formulates a multi-product economic order quantity (EOQ) problem with an order-quantity-dependent permissible delay in payment. In this problem, the shortage is backlogged and there is a warehouse constraint. We show that the model of the problem is a constrained nonlinear-integer-program and propose a genetic algorithm (GA) to solve it. Moreover, a statistical approach is employed to calibrate the parameters of the GA. A numerical example is presented at the end to not only demonstrate the application of the proposed parameter-tuned GA, but also to verify the results and to show GA performs better than a simulated annealing (SA) approach.

Suggested Citation

  • Seyed Hamid Reza Pasandideh & Seyed Taghi Akhavan Niaki & Mohammad Hemmati Far, 2017. "A multiproduct EOQ model with permissible delay in payments and shortage within warehouse space constraint: a genetic algorithm approach," International Journal of Mathematics in Operational Research, Inderscience Enterprises Ltd, vol. 10(3), pages 316-341.
    • Handle: RePEc:ids:ijmore:v:10:y:2017:i:3:p:316-341
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