The study introduces an innovative approach to manage
inventory for deteriorating items by taking into account the permissible delays
and default risk. This perspective offers fresh insights into a complex problem
faced by many businesses. A credit period is often extended by suppliers to
their clients in order to foster long-term relationships and ensure their
survival in the business environment. This draws in new clients, increasing
market demand. Conversely, the provider is exposed to default risk when a
credit period is present. In this paper, an inventory model is developed that
deals with credit period dependent quadratic demand and default risk associated
with sales revenue. The Deterioration rate under the natural environment is
also incorporated with the inventory model. This article discusses the seller's
best choice for determining the customer's allowable credit period duration and
the purchase amount. Concerns about environmental degradation are also taken
into account while making purchases in order to maximize profits. A solution
procedure is given for finding the optimal solution of total profit. Numerical
example is given to show the effectiveness of the model. Finally, sensitivity
analysis is carried out to explore the managerial implications. This study will
help significantly the seller in setting optimal credit periods. In future,
this research can be extended to study inventory models with stochastic demand.
This paper can be extended if shortages are allowed. Different preservation technologies
can also be incorporated to reduce deterioration and enhance environmental
protection.
Author(s) Details
Anima Bag
Department of Statistics, Rama Devi Women’s University,
Bhubaneswar, Pin-751024, India.
P.K. Tripathy
P.G. Department of Statistics, Utkal University,
Bhubaneswar, Pin-751004, India.
Please see the link:- https://doi.org/10.9734/bpi/rumcs/v9/12316F
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