Inventory model having preservation technology with fix lifetime under two level trade credit policy

Abstract

Supply-chain management involves moving storage supplies from origin to consumption, with manufacturers running production based on quadratic demand, distributors and retailers monitoring inventory. When a new product is released, demand often rises linearly and then declines dramatically when an alternative becomes available. Shortages are not allowed. Players' inventory will decrease at a rate of (1/(1+m-t)), where m is fixed lifetime, greater than the replenishment time. Deteriorating goods experience constant mass loss or usefulness, but preservation technology can help the damaged item to be consumed. Retailers with direct customer relationships can reduce stock spoilage through good warehouses. Manufacturers' storage systems have a higher deterioration rate. Two-tier trade credit financing is examined in this model. Distributors offer specific credit terms to stores, while manufacturers provide a grace period for invoicing. Distributors and retailers must pay interest on unsold inventories if invoices aren't settled on time. An integrated storage system reduces costs by minimizing costs through multiple shipments from manufacturers to distributors and retailers, and by adjusting replenishment times for each player. The resolution process is designed so that the supply chain operator gets the best possible decision. Therefore, results are authorized using mathematical examples for different scenarios. Management decisions are suggested.