Optimal warranty period for the controllable deteriorating product under trade credit, inflation, and demand-dependent production rate

Mrudul Y. Jani, Manish R. Betheja and Urmila Chaudhari

International Journal of Logistics Systems and Management, 2025, vol. 51, issue 2, 246-273

Abstract: In any transaction, the trade credit policy is a regular component of market transactions that raise demand. The accompanying businesses provide a warranty period facility to increase consumer demand for products while a higher price of goods lowers demand and vice versa. This study determines a production model, wherein the production rate is directly proportional to price-warranty period under trade credit policy. This work considers: 1) constant deterioration rate and investment in preservation technology; 2) the rate of replacement failure is a nonlinear function, wherein the capital of the producer depends on the warranty period; 3) the rate of inflation is constant. This study is primarily aimed at calculating the optimum warranty period, investment under preservation, cycle time, and sales price to optimise the manufacturer's net profit. The results are validated by solving three numerical examples and for key parameters a sensitivity analysis is analysed with some important managerial implications.

Keywords: constant deterioration; inflation; trade credit policy; time-varying holding cost; preservation technology investment; the warranty period. (search for similar items in EconPapers)
Date: 2025
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