An inventory model for defective items with trade credit and inflation

Abstract

This paper develops an inventory model with imperfect items under the effect of inflation and time value of money in which demand is a deterministic function of selling price and advertisement cost. In this process, a certain fraction of purchased items are defective. These non-conforming items are reworked or refunded if they reach the customer. In this article, the model is considered with finite replenishment rate under progressive payment scheme within the cycle time. Here, the retailer is allowed a trade credit offer by the supplier to buy more items. This model aids in minimizing the total inventory cost by finding the optimal cycle length, the optimal time length of replenishment, and the optimal order quantity. As a particular case, the results of the perfect system (i.e. the system without defective items) are obtained. The optimal solution of the model is illustrated with the help of numerical examples. Also, the effect of changes in the different parameters on the optimal total cost is graphically presented.

An inventory model with imperfect items, stock dependent demand and permissible delay in payments under inflation

“…Gilding et al [18] described a finite horizon inventory model and gave an optimal inventory replenishment schedule under the effect of inflation. Uthayakumar and Palanivel [61] derived an inventory model with trade credit and Inflation for defective items. Palanivel and Uthayakumar [41] proposed an economic production quantity (EPQ) model by taking into account variable production, probabilistic deterioration and partial backlogging under inflation.…”

An Imperfect Production Inventory Model for Instantaneous Deteriorating Items with Preservation Investment Under Inflation on Time Value of Money

“…Imperfect production has been considered by many researchers while developing their inventory models. Uthayakumar and Palanivel [11] presented an inventory model where demand is dependent upon the selling price. The whole model is studied under the effect of inflation on trade credit policies for imperfect quality items.…”

An EPQ model with variable production, probabilistic deterioration and partial backlogging under inflation

“…Yang and Chang (2013) developed a two-warehouse partial backlogging inventory model for deteriorating items with permissible delay in payment under inflation. Uthayakumar and Palanivel (2014) proposed an inventory model for defective items with trade credit and inflation.…”