Optimal inventory replenishment policy for the EPQ model under trade credit derived without derivatives

Within the economic production quantity (EPQ) framework, the main purpose of this paper is to deal with Chung and Huang’s model (2003) and extend Chung and Huang’s model (2003) by considering the unit selling price higher than the unit purchasing cost using the algebraic method to determine the optimal inventory replenishment policy for the retailer under trade credit. This paper provides this algebraic approach could be used easily to introduce the basic inventory theories to younger students who lack the knowledge of calculus. In addition, we develop an easy-to-use procedure to find the optimal inventory replenishment policy for the retailer in the extended model developed in this paper. Finally, numerical examples are given to illustrate the result obtained in our extended model.