A Global Optimizing Policy for Decaying Items with Ramp-Type Demand Rate under Two-Level Trade Credit Financing Taking Account of Preservation Technology

An inventory system for deteriorating items, with ramp-type demand rate, under two-level trade credit policy taking account of preservation technology is considered. The objective of this study is to develop a deteriorating inventory policy when the supplier provides to the retailer a permissible de...

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Bibliographic Details
Published in:Advances in decision sciences 2013, Vol.2013 (2013), p.1-12
Main Authors: Singh, S. R., Sharma, Swati
Format: Article
Language:English
Subjects:
Business logistics
Commercial credit
Credit control
Demand
Deterioration
Discount rates
Economic models
Interest rates
Inventory
Inventory control
Mathematical models
Optimization
Order quantity
Policies
Preservation
Pricing policies
Retailing
Revenues
Stockpiling
Studies
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Summary:An inventory system for deteriorating items, with ramp-type demand rate, under two-level trade credit policy taking account of preservation technology is considered. The objective of this study is to develop a deteriorating inventory policy when the supplier provides to the retailer a permissible delay in payments, and during this credit period, the retailer accumulates the revenue and earns interest on that revenue; also the retailer invests on the preservation technology to reduce the rate of product deterioration. Shortages are allowed and partially backlogged. Sufficient conditions of the existence and uniqueness of the optimal replenishment policy are provided, and an algorithm, for its determination, is proposed. Numerical examples draw attention to the obtained results, and the sensitivity analysis of the optimal solution with respect to leading parameters of the system is carried out.
ISSN:2090-3359
2090-3367
DOI:10.1155/2013/126385