Optimal Economic Ordering Policy for Deteriorating Items under Two-level Trade Credit and Inflation

In this paper, we develop an inventory model with delay in payments for deteriorating items. In our model, retailer who purchases the items enjoys a fixed credit period offered by his/her supplier and, in turn, also offers a credit period to his/her customers in order to promote the market competition. The demand is assumed to be linear function of the retailer's current-stock level. The effect of both inflation and time value of money are taken into account. The items start deteriorating from the moment they are put into the inventory. The mathematical model is developed and numerical example is presented to illustrate optimization.