An inventory model for deteriorating items with inflation induced variable demand under two level partial trade credit : A hybrid ABC-GA approach

Abstract

In this research work an inventory model of a deteriorating item is considered under two level partial trade credit policy incorporating inflation and time value of money in a finite planning horizon. Here it is assumed that a wholesaler offers a partial trade credit to a retailer i.e., trade credit period is offered on an portion of the total purchase amount. In turn the retailer also offers a partial trade credit to its customers. Demand of the item linearly decreases with time and influenced by unit selling price of the item. As selling price is influenced by the inflation and time value of money, so the base demand depends on inflation and bank interest rate also. The retailer also introduces some promotional cost to boost the demand of the item. Under this circumstances, marketing decisions are made to maximize the present value of the total profit. On the other hand combining the features of artificial bee colony (ABC) and genetic algorithm (GA), a hybrid algorithm, artificial bee genetic algorithm (ABGA) has been developed to find the most appropriate business strategies for the proposed model. Efficiency of this algorithm is tested and compared with some ABC variants using a set of benchmark test functions. The model has been illustrated with several numerical examples and some managerial insights are outlined.