An EOQ model for deteriorating items with price dependent demand and permissible delay in payments under inflation

Abstract

An inventory model in which the supplier provides the purchaser a permissible delay of payments is developed when units in inventory are subject to constant rate of deterioration and demand is selling price dependent. Shortages are not allowed and effect of the inflation rate is considered. The optimal solution is characterized to optimize the net profit. An easy-to-use algorithm is given to find the optimal selling price, the optimal order quantity and replenishment cycle time to maximize the net profit. At the end, a numerical example is given to illustrate the theoretical results and sensitivity analysis of parameters on the optimal solutions is carried out.