In particular business transactions, the supplier usually provides an admissible delay in settlement to its vendor to encourage further sales. Additionally, the demand for the commodity is inversely proportional to the function of the sales price, which is non-linear and, in some situations, a holding cost rises over time. Moreover, many goods often deteriorate consistently and shall not be sold after their expiration dates. This study analyses a model for perishable products with a maximum life span with price-dependent demand and trade credit by assimilating these variations and under the supposition of time-varying holding cost. Furthermore, to diminish the rate of deterioration, investment for preservation technology is often taken into account beforehand. Based on real-life circumstances, shortages are admitted and backlogged partially, with an exponential rise in wait time before the new good emerges. The key ambition is to calculate the optimum investment under preservation, sales price, and cycle time using the classical optimization algorithm to maximize the vendor’s net profit. Additionally, to clarify the outcomes, the numerical illustrations are addressed, and the sensitivity analysis of significant parameters is eventually implemented.
Trade credit is generally used by businesses to obtain external funds. This article demonstrates an inventory system from the retailer’s point of view in which (1) the influence of trade credit on expanding small businesses and their consumers is the focus of this research, and (2) the retailer’s on-hand inventory follows the non-instantaneous deterioration. (3) To maximize profit, the demand is disclosed, which is based on not just the sales price, but also on cumulative demand, which indicates saturation and diffusion. (4) The product’s initial price and the permitted discount rate at the time of deterioration are considered to be time-dependent functions of the sales price. In the absence of deterioration, the item is sold at a constant rate, and whenever deterioration occurs, the sales price is assumed to be an exponential function of the discount variable. The main aim is to optimize the total profit of the retailer in terms of cycle time and sales price. The traditional algorithm of optimization is used to address the optimization problem. Finally, the theoretical results are validated by solving three numerical illustrations and conducting a sensitivity analysis of the main factors resulting from the following managerial implications: (1) credit period provides the maximum profit margin of any financing method, and (2) an increase in the initial rate of demand raises sales price while increasing overall profit significantly.
The current study works with an inventory management strategy under the discount cash flow approach for perishable commodities with expiry dates, price-sensitive demand, and investment in preservation technology. In addition, this study examines the probable influence of price-increase on the replenishment strategy of the retailer where specific delivery units can be purchased. Furthermore, in this model, two circumstances are deliberated: (I) when the time of the specific delivery matches with the reordering time of the retailer or (II) when the time of the specific delivery emerges within the duration of the sale. Before the price increase, the supplier provides two payment policies to the retailer from which they can choose one. The policies are either: (1) a permissible delay in payment on regular orders or (2) a discount in payment for the specific delivery. The key goal is to optimize the overall profit for the retailer with respect to the sales price, investment in preservation technology, and cycle time during the depletion time of the specific delivery. In addition, an algorithm is created to optimize the results and seven numerical illustrations are discussed to explain the results along with the special case. Finally, to display the pertinence of this model, a sensitivity analysis of the main parameters is performed with important managerial implications. The key findings of this research are (1) before the price increase, the retailer gets the maximum profit if the retailer chooses a discount in payment policy on the specific delivery; (2) how much to order from the supplier and when to place a specific delivery to generate a maximum profit; and (3) the price-sensitive demand and assumption of future price increase negatively affect the retailer’s overall profit, and the retailer gets maximum benefits if the retailer initially orders the maximum number of units from the supplier before the price increase.
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