Economic Order Quantity Model Under Conditions of Accounts Payables

In this paper, we study an EOQ model that a retailer can utilize when a supplier offers a certain level of annual accounts payable to a retailer as a trade credit policy. The accounts payable method is based on a one-year calendar year, and allows retailers to purchase products on credit without interest up to a certain level of accounts payable. At the end of the year, the retailer must pay off the accounts payable. However, almost all inventory management studies incorporate delay in payment as a trade credit policy into their inventory models. We develop an EOQ model that reflects the accounts payable. Numerical examples are used to verify the validity of the model, and it is found that similar results are obtained compared to the EOQ model reflecting the delay in payment. Furthermore, we present managerial insights from the in-depth analysis: (1) The accounts payable provided by supplier proportionally affects the retailer