Abstract
Adopting the permissible delay method by suppliers offers ample opportunity to overcome the burden of holding costs from retailers. This compensates retailers against the competitive situation as an alternative to price discounts. We present an inventory model for a finite time horizon for deteriorating items. The model focuses on an optimal replenishment policy to maximize profit through inventory control by considering two different interest rate charges. The implementation is possible by the proposed mathematical model for a ramp-type demand with a permissible delay of payment approach. We compare two scenarios: with and without permissible delay in payment. The computational algorithm, numerical examples, theorems, Hessian matrix, and graphs confirm the effectiveness of the inventory model proposed in this study. Sensitivity analysis is used to find risk-compensate opportunities in a peculiar situation.
Published Version
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