Joint effect of selling price and promotional efforts on retailer’s inventory control policy with trade credit, time-dependent holding cost, and partial backlogging under inflation

Abstract

Technology improvements in the retail industry influence the buying behaviours of customers. In the retail industry, it has been observed that the selling price of goods and promotional efforts influence a customer’s choice. In the retail sector, the popularity of financing schemes i.e., trade credit offered by suppliers rather than financial institutions has also grown. Taking such a scenario into consideration and with reference to the retail sector, an inventory model has been developed for non-instantaneous deteriorating items. Effect of inflation also incorporated in model. Customers’ demand is affected by the selling price of the product and the retailer’s promotional efforts. During a shortage period, the backlogging rate of demand is considered a function of the waiting period. The retailer can also take advantage of a trade credit facility provided by the supplier. Furthermore, holding cost is time-dependent, and an investment is made to reduce ordering cost. Various theoretical results are obtained that maximize the retailer’s total profit. To gain better managerial insights, sensitive analysis and numerical examples are provided. The results indicate that the retailer’s profit increases as the trade credit period increases. Further, the profit of the retailer increases if the retailer deals in products with a longer non-deteriorating period. Time-dependent holding cost shows a significant impact on the profit of retail. In addition to this, different existing papers in literature show the special case of the current model.