An Analysis of Non-Instantaneous Deteriorating Items with Credit Policy under Preservation Techniques and No Shortages

Abstract

              The Model outlined in this paper aims to provide insights into optimizing the inventory management of non-instantaneous deteriorating items inventory with preservation technique and credit based payment policy. This   model does not accommodate shortages. Credit policy refers to the permissible time frame within which payment can be made without incurring penalties or adverse consequences. In business and financial transactions, it is   common for parties to agree upon specific terms regarding the timing of payments. In day-to-day life, buyers are provided with a fixed timeframe to settle the payment for received goods. Retailers are not imposed any interest for the goods bought from the suppliers during this credit period. The model assumes a uniform demand rate   and a constant deterioration rate of the product. Mathematical formulation is outlined for three major scenarios. The primary objective of this Economic Order quantity (EOQ) model is to obtain maximum total profit of the overall inventory by establishing an optimal replenishment policy. Numerical examples are included to illustrate theoretical concepts.