Optimal replenishment decision for retailers with variable demand for deteriorating products under a trade-credit policy

Abstract

In this study one obtained the optimal decision of a retailer for the replenishment rate with selling-price and credit-period dependent demand to maximize the profit. A time-varying deterioration rate was considered for those products. A credit-period was offered by the retailer to the end customer to settle the whole payments. The aim of the model was to obtain the maximum profit for the retailer based model. A solution methodology with an algorithm was used to obtain the global optimum profit. An illustrative numerical example was given to test the practical applicability of the model. Numerical study indicated that the profit was at a maximum when the permissible delay-period for payment offered by the suppliers was lies between the permissible delay-time, and the cycle time, offered by the retailer.