An inventory model for deteriorating items with inflation induced variable demand under two level partial trade credit : A hybrid ABC-GA approach☆
Section snippets
Introduction and literature review
Due to huge and stiff competition among the business enterprises in the local as well as in the global market, the business enterprises adopt various tolls to sell their products efficiently. Trade credit policy is one of the most effective promotional tools to push a product, which indirectly reduce the selling price of the product. With the novel invention of Goyal (1985), trade credit policy is heavily used in inventory control systems. In Goyal (1985), it is assumed that a supplier offers
Problem description
In the developing countries like India, Bangladesh, Bhutan, Nepal, etc., it is observed that the price of different daily necessary goods changes frequently. Basically this changes occur due to the combined effect of market inflation and discount rate. Discount rate is simply equal to the earning rate interest offered by global bank e.g. Reserve Bank of India. Depending upon the changes of price of an item, the market demand of the item also changes. So to formulate an inventory model under
Notations and assumptions for the proposed model
The following notations and assumptions are used in developing the models.
Model development and analysis
In this model, it is assumed that in each cycle, the retailer offers a conditional partial credit policy i.e., if the retailer’s order quantity is larger than a predefined order quantity , then the wholesaler offers a credit period to the retailer on a -fraction of the total purchase amount otherwise no credit opportunity is available for the retailer. On the other hand the retailer offers a credit period to the customers on a -fraction of the total purchase amount. Supply is
Solution procedure
For the purpose of continuous optimization and to solve the proposed model a meta heuristic hybrid algorithm, artificial bee genetic algorithm (ABGA) has been proposed combining the features of artificial bee colony (ABC) and genetic algorithm (GA).
Numerical experiments
In this section, to illustrate the proposed model hypothetically, three different real life problems are considered and the problems are optimized using the proposed ABGA algorithm.
Problem-1 : In Kharagpur, West Bengal, India, there is a new age electronic shop, who sells televisions of a particular brand e.g. Sony and purchases the products from a big wholesaler /supplier of Kolkata, West Bengal, India with a partial credit facility. When a new product of this brand is launched, it is found
Managerial insights
To provide some managerial insights for the decision maker, here two parametric studies are performed with respect to promotional effort, and market inflation, .
Conclusion
For the first time an inventory model has been developed for the deteriorating items with inflation and time value of money induced base demand under two level partial trade credit policy in a finite planning horizon, where a wholesaler offers a delay period to a retailer on some portion of the total purchase amount and in turn the retailer also follow up the same as the wholesaler for the customers. In addition the retailer also introduces some promotional cost to boost the demand of the item.
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No author associated with this paper has disclosed any potential or pertinent conflicts which may be perceived to have impending conflict with this work. For full disclosure statements refer to https://doi.org/10.1016/j.engappai.2019.06.013.