Optimal replenishment and preservation investment policy for hybrid demand with trade credit schemes

Abstract

A safe and sustainable environment has become a top priority for all kind of businesses. This research is to develop a sustainable model of frozen products for hybrid price-stock-dependent demand with preservation technology. Generally, the consumption rate is often affected by the price and stock levels for some types of consumer products. In this study, the demand of the product depends on the price and stock of the product as well, and the retailer invests in preservation technology to decrease the occurrence of deterioration of seasonal goods. This results in high demand of products, which encourage both the retailer and the consumer. A massive pile of items in the supermarket is typically found to lead the consumer to buy more creating high demand. The objective is to optimise the replenishment cycle and preservation technology investment cost with hybrid price-stock dependent demand, time-varying carrying cost, and trade-credit policy under shortages for dairy and frozen products. These factors will improve and encourage the purchaser's judgment to buy more products with the appropriate amount. The model is illustrated numerically and validated by sensitivity analysis.