Optimal retailer replenishment decisions in the EPQ model for deteriorating items with two level of trade credit financing

Abstract

This paper deals with the problem of determining the optimal retailer's replenishment decisions for deteriorating items under two levels of trade credit policy within the economic production quantity framework. We assume that the supplier would offer the retailer a delay period and the retailer also adopts the trade credit policy to stimulate his/her customer demand to develop the retailer's replenishment model. Then, we investigate the retailer's inventory system for deteriorating items as a cost minimisation problem to determine the retailer's optimal inventory policy and it has been proved that there exists a unique optimal cycle time to minimise the annual total variable cost for the retailer. In addition, two theorems are developed to efficiently determine the optimal ordering policies for the retailer. Some previously published results of other authors will be special cases of this paper. Finally, numerical examples are used to illustrate all results obtained in this paper.