Preservation technology investment, trade credit and partial backordering model for a non-instantaneous deteriorating inventory

¹ Department of Mathematics, Hajee Mohammad Danesh Science and Technology University, 5200 Dinajpur, Bangladesh.
² Department of Industrial and Systems Engineering, Chung Yuan Christian University, 200 Chung-Pei Rd., 32023 Chung-li, Taiwan.

^* Corresponding author: weehm@cycu.edu.tw

Received: 7 April 2019
Accepted: 27 September 2019

Abstract

In a perfectly transparent and competitive market, suppliers must provide a competitive pricing and service for their customers. The aim of this study is to provide an insight into how preservation technology and credit financing could be used both to reduce the deterioration rate as well as to provide flexible financing for retailers. The methodology is to optimize the cycle length, selling price, the amount of preservation technology and credit financing using inventory theory. The result derived is an optimal total profit per unit time for the system. Finally, using MATLAB 2017a, it is shown graphically that the profit function is concave. The sensitivity analysis is illustrated using Lingo 17. The study not only provides insights to business managers in making wise managerial decisions, it also enables them to weigh the pro and con of implementing preservation technology and credit financing.