An Inventory Model with Stock-Dependent Demand under Trade-Credit Policy and Fixed Life-Time

Abstract

In inventory management, deterioration has a great impact on total profit. To develop business strategies in competitive market, stock-dependent and price-sensitive demand rate is considered to attract more customers. The holding cost and deterioration rate are time-dependent. The product considered has fixed life-time. The model considers the trade-credit policy that is the retailer will offer a certain time period to the customers to settle the account to increase the sales during the permissible period. The objective is to maximise the total cost with respect to cycle time and selling price. The classical optimisation method is used to find the optimal solution. A sensitivity analysis of optimal solutions for different inventory parameters is carried out. The managerial insights are deduced for the retailer.