Optimal Ordering Strategy of a Replenishment Policy for Deteriorating Items under Retailer’s Partial Trade Credit Policy

This paper investigates the economic order quantity inventory model for a retailer under two levels of trade credit to reflect the supply chain management situation. It is assumed that the retailer maintains a powerful position and can obtain full trade credit offered by supplier, yet the retailer just offers the partial trade credit to customers. Under these conditions, the retailer can obtain the most benefits. This study also investigates the retailer’s inventory policy for deteriorating items in a supply chain management situation as a cost minimization problem. The present study shows that the annual total variable cost for the retailer is convex, that is, a unique solution exists. Mathematical theorems and algorithms are developed to efficiently determine the optimal inventory policy for the retailer. The results in this paper generalize some already published results. Finally, numerical examples are given to illustrate the theorems and obtain managerial phenomena.