Abstract
Trade credit is a key concern of a large number of enterprises and has a great impact on inventory. However, while developing inventory models, the impact of trade credit on the demand rate has received very little attention in literature despite of the fact that in reality, the length of the credit period offered has a positive impact on the demand rate. The objective of this paper is to develop an inventory model which will determine retailer's optimal credit period as well as replenishment policy for deteriorating items under two levels of trade credit (in which the supplier as well as the retailer give credit period to their respective customers) using a credit linked demand function. Using three theorems, the optimal replenishment policy has been provided for the retailer. Finally, results have been validated with the numerical examples followed by the sensitivity analysis.
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