An Inventory System for Deteriorating Products with Ramp-Type Demand Rate under Two-Level Trade Credit Financing.pdfVIP

Hindawi Publishing Corporation Advances in Decision Sciences Volume 2011, Article ID 761961, 15 pages doi:10.1155/2011/761961 Research Article An Inventory System for Deteriorating Products with Ramp-Type Demand Rate under Two-Level Trade Credit Financing G. Darzanou and K. Skouri Department of Mathematics, University of Ioannina, 45110 Ioannina, Greece Correspondence should be addressed to K. Skouri, kskouri@uoi.gr Received 27 December 2010; Accepted 13 June 2011 Academic Editor: Henry Schellhorn Copyright q 2011 G. Darzanou and K. Skouri. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. An inventory system for deteriorating products, with ramp-type demand rate, under two-level trade credit policy is considered. Shortages are allowed and partially backlogged. Sufficient conditions of the existence and uniqueness of the optimal replenishment policy are provided, and an algorithm, for its determination, is proposed. Numerical examples highlight the obtained results, and sensitivity analysis of the optimal solution with respect to major parameters of the system is carried out. 1. Introduction In the conventional economic order quantity EOQ model, it is assumed that the supplier is paid for the items immediately after the items are received. In practice, the supplier may provide to the retailer a permissible delay in payments. During this credit period, the retailer can accumulate the revenue and earn interest on that revenue. However, beyond this period the supplier charges interest on the unpaid balance. Hence, a permissible delay indirectly reduces the cost of holding stock. On the other hand, trade credit offered by the supp