A Purchasing Inventory Model for Breakable items with Permissible Delay in Payments and Price Discount

Abstract

Abstract. In this paper, a purchasing inventory model with an aim to minimize the total inventory cost and to find the optimal time interval is discussed. Here the retailers are given trade credit offer. In this model, supplier provides replacement, or price discount for damageable items. Shortages are allowed and backlogged. The results are illustrated with numerical example.Keywords: inventory control, permissible delay in payments, deteriorating items, trade credit period, price discount. AMS Mathematics Subject Classification (2010): 90B05 IntroductionAn important assumption in inventory models found in the existing literature is that the life time of an item is infinite while it is in storage. But the effect of deterioration plays an important role in the storage of some commonly used decaying items like, breakable items (glass, china clay, ceramic goods…etc). Due to the deterioration in stored products some of these items loses their quality and cannot complete the customer's need for ideal product. Deterioration in these items may be constant, continuous, time dependent or stock dependent. The economic order quantity model is based on the assumption that the retailer paid for the items immediately after the items are received. However, in practice, the supplier may provide the retailer many incentives such as a cash discount to motivate faster payment and stimulate sales, or a permissible delay in payment to attract new customer and increase the sales. Hence trade credit can play a major role in inventory control for both the supplier as well as retailer.

An EPQ model for Breakable Item under Imperfect Production Process

“…To decrease the production cost and set-up cost, they are tempted to go for a large number of production and at the same time invites more damage to his units. Some research papers has already been published in this direction (Maragatham and Gnanvel [9], Guchhait et al [10], Mandal and Maiti [11]). On the other hand, it is observed that pressure of one unit onto the other for a long time may increase the breakability rate.…”