Comments on the "Optimal strategy of deteriorating items with capacity constraints under two-levels of trade credit policy"

TL;DR

This paper critiques and corrects mathematical errors in a previous EOQ model for deteriorating items under two-level trade credit policies with capacity constraints, providing revised insights and numerical results.

Contribution

It identifies and rectifies logical and mathematical errors in Liao et al.'s model, improving the accuracy of the EOQ framework under specified trade credit conditions.

Findings

Corrected mathematical formulation of the EOQ model

Re-evaluated numerical results with the revised model

Clarified the implications of interest calculations in trade credit policies

Abstract

This technical note rectified the mathematical and conceptual errors present in Liao et al. (2014). Liao et al. (2014) proposed an EOQ model under two-levels trade credit policy considering limited storage capacity whereby the supplier provides a permissible delay period (M) to the retailer, and the retailer also offers a permissible delay period (N) (whereM > N) to its customers. In the current technical note, we point out some defects of their model from the logical viewpoints of mathematics regarding both interest charged and interest earned. Furthermore, as an example, one of the affected numerical results is re-evaluated.