AN EOQ MODEL FOR INSTANTANEOUS DETERIORATING ITEMS WITH HYBRID PRICE & STOCK DEPENDENT DEMAND WITH PARTIAL BACKLOGGING & ADVANCE PAYMENT RELATED DISCOUNT FACILITIES UNDER TWO LEVEL TRADE CREDIT PERIOD

Abstract

In this paper an EOQ model for instantaneous deteriorating items with hybrid price and stock dependent demand on selling price and stock is developed. The concept of pre-payment policy with a discount facility and two-level of trade credit policy is introduced. The retailer who purchases the items enjoys a fixed credit period offered by the supplier and in turn, also offers a credit period to the customer in order to attract the customers. Shortages are allowed and partially backlogged. The backlogging rate is taken to be inversely proportional to the waiting time for the next replenishment. The classical optimization technique is used to obtain the average profit of the proposed model as a non-linear maximization problem. The main objective of the inventory model is to maximize the total profit per unit time of the retailer by offering discount facility on the purchase price in the case of pre-payment by the customers and offering credit period for both retailer and customer in order to promote the market competition. Finally numerical examples and sensitivity analysis of the major parameters are presented to illustrate the developed model.

Keywords: Inventory, instantaneous deterioration, partial backlogging, hybrid price and stock demand, discount facilities, advance prepayment, Two-Level trade credit period.