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Inventory Policy for a Deteriorating Item with Time-Varying Demand Under Trade Credit and Inflation

Author

Listed:
  • Wang Luqi
  • Zhang Ruijie

    (South China University of Technology, Guangzhou, 510640, China)

  • Chen Zhijian
  • Chen Mingyao

    (China Tower Co., Harbin, 151000, China)

Abstract

It’s often the case that the supplier will provide the retailer with a permissible delay period in payments, during which the supplier charges the retailer no interest and the retailer accumulates interest earned from investment return. As a type of price reduction and an alternative to price discount, trade credit helps the supplier encourage the retailer’s ordering. This paper develops an inventory replenishment model for a deteriorating item with time-varying demand and shortages, taking account of trade credit and time value of money under inflation over a finite time horizon. This model is an extension and development of the existing studies related to the inventory system considering trade credit and time value of money and offers a more general model with more flexibility and resilience to handle the situation where demand of the end market is non-decreasing with regard to time.

Suggested Citation

  • Wang Luqi & Zhang Ruijie & Chen Zhijian & Chen Mingyao, 2019. "Inventory Policy for a Deteriorating Item with Time-Varying Demand Under Trade Credit and Inflation," Journal of Systems Science and Information, De Gruyter, vol. 7(2), pages 115-133, April.
    • Handle: RePEc:bpj:jossai:v:7:y:2019:i:2:p:115-133:n:2
    DOI: 10.21078/JSSI-2019-115-19
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    References listed on IDEAS

    as
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