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Optimal inventory policies for time varying deteriorating items with dynamic demand under upstream and downstream trade credit by discounted cash-flow analysis

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Abstract

This paper envisages the problem concerning varying degrading commodities with dynamic demand under upstream and downstream trade credit. In this article, we have constructed an EOQ model by incorporating a general type of selling price and time-reliant demand function on an infinite time horizon environment with degrading commodities having their certain maximum lifetime. Partial backlogging in shortages has been incorporated in this study, moreover, the backlogging function is reliant on waiting time. In order to maximize the present value of the net profit, this study aims to ascertain the ideal retail price \((p)\) and non-zero ending inventory time point \(\left(\tau \right)\) for two separate credit durations. We discuss the optimization properties and develop an algorithm for solving the problem based on classical optimization techniques. Extensive theoretical, numerical development and graphical representation have been incorporated for the validity and reliability of the suggested model. The influence of numerous key inventory parameters and a robust managerial insight incorporated in this study assist managers in taking the right decision and escalating his/her business in a proper planning way.

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  1. Department of Mathematics, Sidho-Kanho-Birsha University, P.O. – Purulia Sainik School, Purulia, WB, 723104, India

    Sudipa Das, Mukunda Choudhury & Gour Chandra Mahata

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Das, S., Choudhury, M. & Mahata, G.C. Optimal inventory policies for time varying deteriorating items with dynamic demand under upstream and downstream trade credit by discounted cash-flow analysis. OPSEARCH 61, 1–32 (2024). https://doi.org/10.1007/s12597-023-00681-w

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