An inventory model with declining demand market for deteriorating items under a trade credit policy

Abstract

The main purpose of this paper is to investigate the optimal retailer’s replenishment decisions for deteriorating items under a trade credit policy to reflect more realistic situations within an economic product quantity framework. In this paper, we analyse an inventory model when the supplier offers the retailer a credit period to settle the account, if the ret ailer orders a large quantity. The proposed study is meant for a declining demand market in which shortages are not allowed. The demand rate is a decreasing function of time and the deterioration rate is a constant fraction of the on-hand inventory. The mathematical formulation is explored by numerical examples. An analysis of the sensitivity of parameters on the optimal solution of our proposed study is carried out.

Keywords:

• Inventory
• trade credit
• declining demand
• deteriorating items

AMS Subject Classifications:

• C60
• C61
• D80
• M11
• C02

Additional information

Funding

M. Pervin is very grateful to the University Grants Commission (UGC) of India for providing financial support to continue this research under the [MANF(UGC)] scheme: Sanctioned letter number [F1-17.1/2012-13/MANF-2012-13-MUS-WES-19170 /(SA-III/Website)] dated 28/02/2013.