Buyers- Suppliers Win-Win Cash Flow Inventory Model with Linear Demand under Various Production Industries

Abstract

This paper presents an analytical and numerical analysis of an inventory model incorporating credit periods, focusing on major business concerns that face cash flow constraints. In such circumstances, credit periods serve as a crucial tool for determining optimal production inventory strategies. The foremost objective of the research is to assess the benefits accrued by both producers and buyers within a fixed credit period framework. The analytical solution model developed in this study aims to optimize production inventory costs by considering the cycle periods and interest earned during shortage periods. Through the utilization of differential equations, the model offers a comprehensive evaluation of inventory management strategies. By incorporating credit periods as a key parameter, the research investigates how producers and buyers can derive maximum benefits from this approach. Furthermore, a numerical example is given to describe the practical application of the model and demonstrate how decision variables are employed in real-world scenarios. This example showcases the effectiveness of the analytical and numerical analysis in determining optimal production inventory costs. Overall, this study contributes to the understanding of inventory management in situations where cash flow is inconsistent. By incorporating credit periods into the analysis, the research provides insights into the decision-making process for production inventory, enabling businesses to optimize costs and enhance overall efficiency.