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Optimal inventory policies for deteriorating items with expiration date and dynamic demand under two-level trade credit

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  • Chandan Mahato

    (Sidho-Kanho-Birsha University)

  • Gour Chandra Mahata

    (Sidho-Kanho-Birsha University)

Abstract

In this paper, we build an inventory model for deteriorating items with expiration time which incorporates both quantity and quality losses under two-level trade credit. The demand is dynamic and varies simultaneously with the length of credit period offered to customers and product freshness condition. In addition, the risk of default increases with the credit period length. First, we investigate the retailer’s inventory system for deteriorating items as a profit maximization problem to determine the optimal inventory policies. In order to obtain the optimal ordering policies, we propose some lemmas to help the retailer in accurately and quickly determine the optimal replenishment decisions under maximizing the annual total profit. Finally, we have used some numerical examples to illustrate the proposed models and study the sensitivity analysis on the optimal solution with respect to each parameter and provide some managerial insights.

Suggested Citation

  • Chandan Mahato & Gour Chandra Mahata, 2021. "Optimal inventory policies for deteriorating items with expiration date and dynamic demand under two-level trade credit," OPSEARCH, Springer;Operational Research Society of India, vol. 58(4), pages 994-1017, December.
    • Handle: RePEc:spr:opsear:v:58:y:2021:i:4:d:10.1007_s12597-021-00507-7
    DOI: 10.1007/s12597-021-00507-7
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    Cited by:

    1. Mrudul Y. Jani & Heta A. Patel & Amrita Bhadoriya & Urmila Chaudhari & Mohamed Abbas & Malak S. Alqahtani, 2023. "Deterioration Control Decision Support System for the Retailer during Availability of Trade Credit and Shortages," Mathematics, MDPI, vol. 11(3), pages 1-27, January.
    2. Mukunda Choudhury & Sujit Kumar De & Gour Chandra Mahata, 2023. "A pollution-sensitive multistage production-inventory model for deteriorating items considering expiration date under Stackelberg game approach," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11847-11884, October.
    3. Nidhi Handa & S. R. Singh & Neha Punetha, 2022. "Impact of carbon emission in two-echelon supply chain inventory decision with controllable deterioration and two-level trade-credit period," OPSEARCH, Springer;Operational Research Society of India, vol. 59(4), pages 1555-1586, December.
    4. Soosan Moradi & Mohammad Reza Gholamian & Arash Sepehri, 2023. "An inventory model for imperfect quality items considering learning effects and partial trade credit policy," OPSEARCH, Springer;Operational Research Society of India, vol. 60(1), pages 276-325, March.
    5. Ata Allah Taleizadeh & Leila Aliabadi & Park Thaichon, 2022. "A sustainable inventory system with price-sensitive demand and carbon emissions under partial trade credit and partial backordering," Operational Research, Springer, vol. 22(4), pages 4471-4516, September.
    6. Chandan Mahato & Gour Chandra Mahata, 2023. "Optimal Pricing and Inventory Decisions for Perishable Products with Multivariate Demand Function Under Trade Credit," SN Operations Research Forum, Springer, vol. 4(2), pages 1-26, June.
    7. Bi, Gongbing & Wang, Pingfan & Wang, Dujuan & Yin, Yunqiang, 2021. "Optimal credit period and ordering policy with credit-dependent demand under two-level trade credit," International Journal of Production Economics, Elsevier, vol. 242(C).

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