Abstract
In present real life situations, the stock and expiration date directly impact on the demand of an item. In this context, this research work develops an inventory model for stock and expiration rate-dependent demand under a two-level trade credit policy. Specifically, the following three situations are studied: (i) trade credit policy without zero ending inventory; (ii) trade credit policy with zero ending inventory; (iii) trade credit policy with partial backlogged shortages. The proposed inventory model is formulated as a non-linear constrained optimization problem. Some theoretical results are derived, and an algorithm is stated in order to solve the proposed inventory model. The main objective of the inventory model is to determine the optimal cycle length, the optimal ending inventory level, and the optimal number of units displayed which maximize the total profit. Some numerical examples are solved. Finally, a sensitivity analysis is done with the aim to see the impacts of a variation of the input parameters on the decision variables and the total profit.
Highlights
The first inventory model was introduced by Harris [1] in 1913
This inventory model is well known as the economic order quantity (EOQ) inventory model
The EOQ inventory model assumes that the demand is constant and the shortage is not permitted
Summary
The first inventory model was introduced by Harris [1] in 1913. This inventory model is well known as the economic order quantity (EOQ) inventory model. Uthayakumar and Tharani [7] included advance payments and trade credit financing in an inventory model with shortages for deteriorating items with expiration dates. Panda et al [23] investigated a two-warehouse inventory model with partial backlogging and trade credit policy for deteriorating items with price- and stock-dependent demand. Shaikh et al [45] considered price-sensitive demand, inflation, and reliability in a production inventory model for deteriorating items under trade credit policy. This research work formulates an inventory model with expiration date, shelf-space, and stock-dependent demand under two-level trade credit financing and partial backlogging.
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