Inventory Optimization for Non-Instantaneous Deteriorating Items Under Retailer’s Trade Credit and Partial Backlogging
DOI:
https://doi.org/10.56919/usci.2651.027Keywords:
Non-instantaneous deterioration, Time dependent demand, Downstream Trade Credit, Partial Backlogging, Inventory optimizationAbstract
In this research, an inventory model is developed for non-instantaneous deteriorating items with time-dependent demand under the retailer’s trade credit and partial backlogging. In the model, the retailer receives no trade credit from the supplier but offers trade credit to customers. Payment strategies for the retailer were adopted in calculating the interest associated with the trade credit. The cost function was obtained and optimized using the gradient method. To illustrate the model, numerical examples are provided. The results show that case 1 scenario 2 with and produced the highest profit of . Sensitivity analyses carried out to examine the influence of the inventory parameters showed that decreases in h by 10% and N by 20% lead to higher profit, indicating that decreases in holding costs and offering customers trade credit can lead to higher profitability and better decisions. From a managerial point of view, it is advised that retailers should regularly extend trade credit to customers to reduce item overstay and earn higher profits.
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