A Sustainable Discount Policy for Deteriorating Items under Trade Credit Financing and Power Demand Pattern

A model of an inventory system for a single product and sustainable discount policy under trade credit policy is studied. Demand of a product follows a power pattern which is dependent on time. For this inventory system, our findings provide the efficient policy that benefits both suppliers and retailers under the consideration that stock is completely sold out before the expiry of product life and deterioration starts after the non-degradation period. High demand for the product due to the sustainable discount policy decreases the period of holding and hence reduces the quantity of deteriorated product, which increases the profit of the business. The discount offered on the MRP of the product, depending upon the length of the permissible delay period, increases demand for the product. Under a constant rate of holding cost and deterioration, a model is developed to maximize retailer’s profit. High demand for the product leads to shortages, which are allowed and fully backlogged. Moreover, to enhance the model’s significance and its applicability, two financial policies have been implemented together, and their impact is discussed. Depending upon the permissible delay period and discount rate, different cases of models are derived. The impact of power demand and trade credit policy is investigated, and the applicability of the proposed model is illustrated with the help of numerical examples presented in the numerical section.