Non-instantaneous controlled deteriorating inventory model for stock-price-advertisement dependent probabilistic demand under trade credit financing

Nita H. Shah (), Mamta Keswani (), Uttam Kumar Khedlekar () and Naisargi M. Prajapati ()
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Nita H. Shah: Gujarat University
Mamta Keswani: Gujarat University
Uttam Kumar Khedlekar: Department of Mathematics and Statistics
Naisargi M. Prajapati: Gujarat University

OPSEARCH, 2024, vol. 61, issue 1, No 20, 459 pages

Abstract: Abstract Managing of deteriorating products is a challenging task for suppliers/retailers in an uncertain market environment. The main objective of the proposed study is to determine the optimal inventory management strategy for non-instantaneous deteriorating products with multivariate probabilistic demand, considering the influence of bi-level trade credit financing to reflect realistic market circumstances within the EOQ framework. We have incorporated preservation techniques to control deterioration. The demand for the deteriorating product is primarily influenced by factors such as price, stock, and frequency of advertisement. To stimulate sales, the supplier adopts two promotional strategies: price discounts and trade credit policies for the retailer. Similarly, the retailer offers the same to encourage customers to make more purchases. The objective of the proposed study is to optimize the expected net profit of the retailer per unit of time, selling price, economic order quantity, cycle time, and investment in preservation techniques under three trade credit financing policy scenarios. We also verify the concavity of the objective function by applying the necessary and sufficient criteria and presenting graphical representations. Numerical validations of the three cases and the optimal case are analysed by assessing the sensitivity and impact of key parameters. Through discussion, we propose managerial insights and highlight the applicability of the proposed model for both suppliers and retailers.

Keywords: Inventory; Non-instantaneous deterioration; Preservation techniques; Stock-price-advertisement dependent probabilistic demand; Trade credit financing; Price discount policy (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s12597-023-00701-9

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