Comprehensive solution procedure for optimizing replenishment policies of instantaneous deteriorating items with stock-dependent demand under partial trade credit linked to order quantity

Abstract

Trade credit financing is widely accepted as an inevitable strategy to increase profitability in inventory management. We assume that the supplier offers the retailer a fully permissible delay of M periods if the retailer orders more than or equal to a predetermined order quantity w. We revisit an economic order quantity model for instantaneous deteriorating commodities with inventory level dependent demand rate in a supply chain environment by allowing shortages which are partially backlogged. This model also incorporates aspects such as complete and no backlogging. The necessary and sufficient conditions for the existence and uniqueness of this model using the lemmas are investigated. An effective algorithm is proposed to obtain the optimal replenishment policies of this model using SCILAB 5.5.0 to resolve the problem. Finally, we solve numerical examples to substantiate the theoretical results of the underlying model and obtain some managerial insights.