Title: Optimal ordering policy for deteriorating items under down-stream trade credit dependent quadratic demand with full up-stream trade credit and partial down-stream trade credit

Authors: Nita H. Shah; Mrudul Y. Jani; Urmila Chaudhari

Addresses: Department of Mathematics, Gujarat University, Ahmedabad-380 009, Gujarat, India ' Department of Applied Sciences, Faculty of Engineering and Technology, Parul University, Vadodara-391760, Gujarat, India ' Department of Applied Sciences, Faculty of Engineering and Technology, Parul University, Vadodara-391760, Gujarat, India

Abstract: Nowadays, the use of the offer of delay payment is a very impressive tool to boost the market demand by attracting more customers. In this paper, we propose an inventory model, in which a retailer receives a permissible delay on the entire purchase expanse from the manufacturer (i.e., an up-stream full trade credit). In comparison, the retailer asks customers to pay some percent of purchasing cost at the time of receiving the product to reduce default risk (i.e., a down-stream partial trade credit). We consider the product with maximum fixed-life time deterioration and to reduce deterioration of the product, seller spends capital on preservation technology to preserve the item. Here, down-stream trade credit dependent quadratic demand is debated which is suitable for the products whose demand increases initially and afterward it starts to decrease. Industries like fashion and electronics most probably deals with this type of demand. The objective is to minimise the total relevant cost of retailer with respect to cycle time, down-stream trade credit and investment for preservation technology. The model is supported with numerical examples. Sensitivity analysis is done to derive insights for decision-maker. Graphical results, in three dimensions, are exhibited with supervisory decisions.

Keywords: inventory; deterioration; fixed-life time; quadratic demand; preservation investment; partial down-stream trade credit; full up-stream trade credit.

DOI: 10.1504/IJMOR.2018.090804

International Journal of Mathematics in Operational Research, 2018 Vol.12 No.3, pp.378 - 396

Received: 15 Jul 2016
Accepted: 13 Oct 2016
Published online: 28 Mar 2018 *

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