Manufacturing inventory model with random demand and finite production rate under two levels of trade credit finance

Om Prakash and Nipa Biswas

International Journal of Inventory Research, 2023, vol. 6, issue 2, 164-181

Abstract: The main purpose of this paper is to investigate a probabilistic inventory model with finite production rate and continuous stochastic demand rate under two levels of trade credit policy. In this trade credit policy, supplier will offer a delay period to the retailer for payment and the retailer also extends the trade credit policy to his/her customer. The model is dominated by retailer and he can take a powerful decision. Therefore, the objective of manufacturing inventory system is the minimisation of overall production cost and to determine the retailer's optimal replenishment decision policy. Some accessible theorems are developed to determine the optimal replenishment decisions for the retailer. Theorems on the conditional convexity of the production cost of system are proposed and proved. The optimal replenishment policy of the system can be easily determined with the help of two theorems and illustrated with the help of numerical examples.

Keywords: production; probabilistic inventory; stochastic demand; trade credit. (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijires:v:6:y:2023:i:2:p:164-181

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