Optimal Ordering policy in demand declining market under inflation when supplier credits linked to order quantity


In this research paper, a lot–size model is proposed when supplier offers the retailer a credit period to settle the account if the retailer orders a large quantity. The proposed study is meant for demand declining market. Here, the retailer needs to arrive at a static decision when demand of a product is decreasing and on the other side the supplier offer the credit period if the retailer orders for more than pre – specified quantity. Shortages are not allowed and the effect of inflation is incorporated. The objective to minimize the total cost in demand declining market under inflation when the supplier offers a credit period to the retailer if the ordered quantity is greater than or equal to pre – specified quantity. An easy – to – use flow chart is given to find the optimal replenishment time and the order quantity. The mathematical formulation is supported by a numerical example. The sensitivity analysis of parameters on the optimal solution is carried out.

DOI Code: 10.1285/i20705948v4n2p131

Keywords: Demand declining market, inflation, trade credit, lot – size


Chapman, C.B. and Ward, S.C.,(1988). Inventory control and trade credit – A further reply. Journal of Operational Research Society, 39, 219 – 220.

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