Retailer's ordering policy for deteriorating imperfect quality items when demand and price are time-dependent under inflationary conditions and permissible delay in payments

Abstract

The present paper investigates an inventory model with unreliable supply, where each received lot may have a random fraction of defective items with known distribution. Thus, the inspection of lot becomes essential in almost all the situations, especially when the items are of deteriorating in nature. Moreover, in today's competition inherited business world, organisations use many promotional tools in order to increase their sales. One such tool is a permissible delay in payments, i.e., the buyer does not have to pay for the goods purchased immediately rather can defer the payment for a prescribed period given by the supplier. Further, in today's wobbling economy, especially for long-term investment, the effects of inflation cannot be disregarded as uncertainty about future inflation may influence the ordering policy. Being motivated by these aspects, the present paper investigates the impact of inspection on retailer's ordering policy for deteriorating items under permissible delay in payments when demand and price both varies with the passage of time. Finally, the model has been analysed and validated with the help of numerical examples. A comprehensive sensitivity analysis is also presented which provides important managerial implications.