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Inventory ordering policies for mixed sale of products under inspection policy, multiple prepayment, partial trade credit, payments linked to order quantity and full backordering

Author

Listed:
  • Ata Allah Taleizadeh

    () (University of Tehran)

  • Sara Tavassoli

    () (University of Tehran)

  • Arijit Bhattacharya

    () (University of East Anglia)

Abstract

The situation where serviceable products are sold together with a proportion of deteriorating products to consumers is rarely discussed in the literature. This article proposes an inventory model with disparate inventory ordering policies under a situation where a portion of serviceable products and a portion of deteriorating products are sold together to consumers (i.e. mixed sales). The ordering policies consider a hybrid payment strategy with multiple prepayment and partial trade credit schemes linked to order quantity under situations where no inventory shortage is allowed and inventory shortage is allowed with full backorder. The hybrid payment policy offered by a supplier is introduced into the classical economic ordering quantity model to investigate the optimal inventory cycle and the fraction of demand that is filled from the deteriorating products under inspection policy. Further, a new solution method is proposed that identifies optimal annual total profit with mixed sales assuming no inventory shortage and inventory shortage with full backorder. The impact of an inspection policy is investigated on the optimality of the solution under hybrid payment strategies for the deteriorating products. The validation of the proposed model and its solution method is demonstrated through several numerical examples. The results indicate that the inventory model along with the solution method provide a powerful tool to the retail managers under real-world situations. Results demonstrate that it is essential for the managers to consider inclusion of an inspection policy in the mixed sales of products, as the inspection policy significantly increases the net annual profit.

Suggested Citation

  • Ata Allah Taleizadeh & Sara Tavassoli & Arijit Bhattacharya, 2020. "Inventory ordering policies for mixed sale of products under inspection policy, multiple prepayment, partial trade credit, payments linked to order quantity and full backordering," Annals of Operations Research, Springer, vol. 287(1), pages 403-437, April.
  • Handle: RePEc:spr:annopr:v:287:y:2020:i:1:d:10.1007_s10479-019-03369-x
    DOI: 10.1007/s10479-019-03369-x
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    Cited by:

    1. Mamta Gupta & Sunil Tiwari & Chandra K. Jaggi, 2020. "Retailer’s ordering policies for time-varying deteriorating items with partial backlogging and permissible delay in payments in a two-warehouse environment," Annals of Operations Research, Springer, vol. 295(1), pages 139-161, December.
    2. Wu, Chengfeng & Liu, Xin & Li, Annan, 2021. "A loss-averse retailer–supplier supply chain model under trade credit in a supplier-Stackelberg game," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 182(C), pages 353-365.
    3. Mamta Gupta & Sunil Tiwari & Chandra K. Jaggi, 0. "Retailer’s ordering policies for time-varying deteriorating items with partial backlogging and permissible delay in payments in a two-warehouse environment," Annals of Operations Research, Springer, vol. 0, pages 1-23.

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