An EOQ inventory system of ameliorating items for price dependent demand rate under retailer partial trade credit policy

This paper studies the optimal ordering decision in the economic ordering quantity framework under two levels of trade credit policy where demand rate is a selling price dependent with ameliorating items whose value or utility or quantity increase over the time. In this paper, it is assumed that the retailer maintains a powerful decision-making right and can obtain the full trade credit offered by the supplier yet retailer just offers the partial trade credit to his/her customers. Furthermore, we consider that the items which were already sold but not yet paid for by customers would also incur interest charges or capital cost, which is not considered in the existing studies concerning retailer partial trade credit. For the objective function sufficient conditions for the existence and uniqueness of the optimal solution are provided. An efficient algorithm is designed to determine the optimal pricing and inventory policies for the retailer. Finally we obtain a lot of managerial insights from numerical examples. The results would provide valuable references for retailer in controlling the inventory of ameliorating items. The results also show that it is very necessary and realistic to consider the capital cost incurred by the items which were already sold but not yet paid for by customers under retailer partial trade credit policy.