Deterioration is defined as decay, evaporation, obsolescence, loss of utility or marginal value of the commodity that results into the reduction of usefulness from the original condition. e.g., medicines, bulbs, fashionable goods, dairy products, grocery, fruits, vegetables, crockery items, electronic items, fashion accessories etc.
Published in Chapter:
Optimal Policies for Items With Quadratic Demand and Time-Dependent Deterioration Under Two Echelon Trade Credits
Azharuddin Sarfuddin Shaikh (Institute of Infrastructure Technology Research and Management, India) and Poonam Prakash Mishra (Pandit Deendayal Petroleum University, India)
Copyright: © 2018
|Pages: 12
DOI: 10.4018/978-1-5225-3232-3.ch002
Abstract
In today's competitive and global business scenario there is always a race to boost demand of your product over others. This can be achieved by different means and allowing permissible delay in payments is one of them. Researchers have proposed number of inventory models with trade credit that actually help to understand effect of trade credit on total profit and overall demand. This paper proposes a two – echelon trade credit where retailer receives credit period from the manufacturer and offer it to end customers appropriately to raise demand. Proposed inventory model assumes quadratic demand and subjected to time dependent deterioration. Ordering cost is considered lot – size dependent whereas holding cost has been taken time dependent. In this model profit is maximized considering cycle time as a decision variable. Sensitivity analysis of crucial inventory parameters and numeric examples are discussed in detail. Outcome of this model can be applied to a huge range of products like readymade garments, fashion accessories, electronics, furniture and home furnishing products.