ECONOMIC ORDER QUANTITY (EOQ) OPTIMIZATION MODEL WITH PAYMENT DELAY

Abstract

Economic Order Quantity is one mathematical model that is useful for managing inventory to be more optimal. This final project will discuss an Economic Order Quantity model with permissible delay in payments. The model is presented in two conditions, namely the first when T m (retailers pay bills to suppliers exactly or less than the agreement), then the retailer is not subject to inventory interest and secondly when T m (retailers pay bills to suppliers more than the agreement), then the retailer is subject to inventory interest. By using the Economic Order Quantity model, the period of time and the optimal number of orders can be determined to obtain optimal profit. Keywords : Economic Order Quantity, Payment Delay, Inventory Interest.