Abstract
Trade credit plays an important role in financing many industries. In the classical inventory model it is assumed that the buyer must pay for the items as soon as the items are received. In this problem, it is considered that the retailer can pay the supplier either at the end of the credit period or later pay interest on the unpaid amount for the overdue period. Here, the retailer's inventory model for the optimal cycle time and payment time for a retailer is developed. The effects of the inflation rate, deterioration rate and delay in payment have been discussed. The whole study is performed in a fuzzy environment by taking the opportunity cost, interest earned and interest paid rate as a triangular fuzzy number. Fuzzy profit functions, which involve fuzzy arithmetic operation, are defined using the function principle. We use the signed distance method to defuzzify the fuzzy profit function. Moreover, numerical and sensitivity analysis is performed to validate the proposed model.
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