Inventory Model with Time Dependent Demand Rate under Inflation When Supplier Credit Linked to Order Quantity

Abstract

This study develops an inventory model under which the supplier provides the purchaser a permissible delay in payments, if the purchaser orders a large quantity. Shortages are not allowed and effect of the inflation rate and delay in payments are discussed. In this paper, we establish an inventory model for non-deteriorating items and time-dependent demand rate under inflation when supplier offers a permissible delay to the purchaser, if the order quantity is greater than or equal to a predetermined quantity. We then obtain optimal solution to find optimal order quantity, optimal replenishment time and optimal total relevant cost. Finally, numerical examples are given to illustrate the theoretical results and made the sensitivity analysis of parameters on the optimal solutions.