Joint inventory, promotion and preservation decisions for deteriorating items with maximum lifetime and stochastic demand under two-level partial trade credit

This study models a joint inventory, promotional effort and preservation decision-making problem for deteriorating items with maximum lifetime under a two-level partial trade credit and allowable shortages. This paper considers a supplier-retailer-customer supply chain model which allows: 1) for settling the cost of purchasing, the supplier offers a partial trade credit to the retailer and at the same time retailer offers a partial trade credit to the customer; 2) the upstream(supplier-retailer) credit period increases sales of the supplier and revenue of the retailer, the downstream (retailer-customer) credit period not only lifts demand but also the opportunity cost; 3) the deteriorating product not only deteriorate continuously, but also have maximum lifetime and to reduce the deterioration rate we use the preservation technology; 4) price and promotional effort are dependent on random demand; 5) shortages are considered. The objective is to find the optimal promotional effort, preservation technology investment, length of time for the inventory level reaches zero and replenishment cycle strategies while maximising the total profit per unit time. Numerical examples are included to illustrate the algorithmic procedure and the effect of key parameters is studied to analyse the behaviour of the model.