An optimal replenishment policy for deteriorating items with delay in payments and cash discount offers

Abstract

In this study, an appropriate inventory model for deteriorating items with permissible delay in payments and cash discount offers is considered. The purpose of this paper is to find an optimal replenishment policy for minimizing the total relevant inventory cost. We analyse the total inventory cost functions of two cases and provide an easy-to-use method to find the optimal replenishment cycle time and order quantity under various circumstances. Finally, an example is given to test and verify the theoretical results, furthermore, Matlab software is developed to efficiently emulate the function of the optimal replenishment policy. Emulational results indicate that the policy for the retailer can obtain the minimum total annual relevant inventory cost.