Non-instantaneous deteriorating inventory model under the joined effect of trade-credit, preservation technology and advertisement policy

Abstract

PurposeThis paper aims to simultaneously consider an inventory model with price and advertisement dependent demand, non-instantaneous deterioration rate with preservation technology investment, partially backlogged shortages and trade credit.Design/methodology/approachThis model considered a non-instantaneous deterioration, which starts after a certain storage period with a constant rate. The proposed model focused on two things. The first one is to reduce the deterioration rate by preservation technology investment, and the second one is using an appropriate trade credit period to maximize the total profit. The classical optimization technique is used to solve the problem.FindingsThe authors found that trade credit, advertising cost, preservation technology affect the total cost and selling price is one of the most important decision variables affecting the model.Practical implicationsThis study provides a reference for a manufacturer and a retailer on making inventory decisions under different pricing, advertisement expense, preservation technology investment and credit strategies. Four cases are presented to illustrate the inventory model. Sensitivity analyses are performed to gain managerial insights for decision-making.Originality/valueThe study simultaneously considers a non-instantaneous deterioration inventory model, trade-credit, and preservation technology and advertisement policy. From our literature search, no researcher has undergone this type of study.