The inventory model for optimal replenishment policy with deterioration and various interest rates: two levels permissible delay in payment strategy

Jitendra Kaushik

International Journal of Mathematics in Operational Research, 2025, vol. 31, issue 3, 314-338

Abstract: Here, I developed an 'EOQ' model for the deteriorating items considering the price and time-dependent ramp-type demand function. I considered two rates for interest charged and discussed four different possibilities according to the length of the time slots: 1) both the rates lie in the growing phase; 2) one lies in the growing, and another lies in the constant phase. Permissible delay in payment provides an opportunity for extra sales, which increases revenue for suppliers and retailers. Suitable numerical examples are provided to demonstrate the obtained results. The comparison of models is presented considering permissible delay and without permissible delay; our results highlight higher profit to retailers in case of permissible delay. Then, sensitivity analysis is performed, and its implication is discussed from a managerial perspective.

Keywords: economic order quantity; nonlinear demand function; permissible delay in payment; PDP: deterioration; shortage; inventory model. (search for similar items in EconPapers)
Date: 2025
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