A Fuzzy Inventory Model of Defective Items Under the Effect of Inflation with Trade Credit Financing

Abstract

The most common problem arises in inventory system is the defective items, which may arise due to improper inspection or due to mishandling during the transportation from supplier to retailer. This paper develops a fuzzy inventory model with defective items under the effect of inflation and the time value of money, where the demand is a function of selling price and advertisement cost. Moreover, to keep the faith of the customers, the retailer either reworks the defective items before they sold or refund the amount with penalties if they reached the customers. Also, the model is considered here with finite replenishment rate under trade credit financing scheme. The objective of the model is to obtain minimum total inventory cost by finding the optimal cycle length and the optimal order quantity. Furthermore, as a particular case, the results of the perfect system (i.e., the system without defective items) are obtained. Finally, the optimal solution of the model is illustrated with the help of numerical example. The effect of parameters are also considered and presented in the form of tables.