EOQ Model for Delayed Deteriorating Items with Shortages and Trade Credit Policy

Abstract

This paper deals with a deterministic inventory model for deteriorating items under the condition of permissible delay in payments with constant demand rate is a function of time which differs from before and after deterioration for a single item. Shortages are allowed and completely backlogged which is a function of time. Under these assumptions, this paper develops a retailer's model for obtaining an optimal cycle length and ordering quantity in deteriorating items of an inventory model. Thus, our objective is retailer's cost minimization problem to find an optimal replenishment policy under various parameters. The convexity of the objective function is derived and the numerical examples are provided to support the proposed model. Sensitivity analysis of the optimal solution with respect to major parameters of the model is included and the implications are discussed.