An integrated inventory model with warranty dependent credit period under two policies of a manufacturer

Abstract

This article considers an integrated inventory model that deals with one manufacturer and one retailer. The manufacturer provides warranty period for the finished product to ensure product reliability. Also, the manufacturer gives the opportunity to take the facility of delay payment to the retailer. The main objective of this article is to analyze the effect of the credit period offered by the manufacturer which is functionally depended on warranty period of the product. Again, the retailer also provides trade credit to the end customers. Thus, because of presence of product warranty and customers’ credit, demand rate of customers has been assumed depending on warranty period and customers’ credit period. In this paper, two policies have been discussed according to the manufacturer’s policy on warranty period such as (1) free repairing for the defective products within the warranty period and (2) no warranty period to be offered. The purpose of this article is to maximize the integrated model optimizing product warranty, customers’ credit period and cycle length. Also, solution algorithms have been developed to solve the derived model. Finally, numerical examples have been carried out to illustrate the feasibility of the model.