Optimizing a supply-chain inventory model having price and stock-dependent demand under supplier credits and cash discount policy
Journal of Decision Making and Healthcare, Volume 2, Issue 2, August 2025, Pages: 114–135
SOURAV KUMAR PATRA
Department of Mathematics, Veer Surendra Sai University of Technology, Burla 768018, Odisha, India
Abstract
Traditional Economic Order Quantity (EOQ) models assume that payment for goods is made immediately upon delivery. However, suppliers often offer two key incentives simultaneously: (1) a payment delay to captivate new customers and increase sales, and (2) a cash discount to encourage prompt disbursement and diminish credit costs. This paper develops an optimal supply-chain inventory model for deteriorating goods with price and stock-dependent demand, incorporating a constant deterioration rate, under both trade credit and cash discount policies. The model assumes no shortages and considers the salvage value of deteriorated units. Our objective is to minimize costs in a scenario where the supplier provides both a financial discount and a permissible payment delay. We formulate a mathematical model and propose a solution approach in both crisp and fuzzy contexts. Numerical examples, analyzed using Mathematica 13.0.1 software, validate our findings and demonstrate the convexity of the overall cost function. Additionally, a sensitivity analysis of key parameters is conducted to provide valuable managerial insights for inventory managers.
Cite this Article as
Sourav Kumar Patra, Optimizing a supply-chain inventory model having price and stock-dependent demand under supplier credits and cash discount policy, Journal of Decision Making and Healthcare, 2(2), 114–135, 2025