Analysing the imperfect production model for decaying products with advertisement and stock dependent demand
by Rinki Chaudhary; S.R. Singh; Karuna Rana
International Journal of Advanced Operations Management (IJAOM), Vol. 15, No. 3, 2023

Abstract: This study examines the impact of inflation on trade credit period under an imperfect production model for decaying products with advertisement and stock-dependent demand. The model takes into account the impact of inflation on various cost components, including production, ordering, and holding costs, as well as the effect of the trade credit period on demand and cash flow. The created items have been inspected for imperfections, but the production rate is better than the screening rate. The study highlights the interplay between inflation and other parameters such as advertising efforts and stock levels in determining optimal trade credit policies that maximise the firm's profits. The results suggest that inflation has a significant impact on trade credit period, and firms need to adjust their trade credit policies to remain competitive in an inflationary environment. The study provides valuable insights for firms operating in the context of decaying products and highlights the importance of considering inflation in trade credit policy decisions. A solution process is provided to establish the most favourable ordering policy. Finally, sensitivity analysis on different parameters has been approved.

Online publication date: Fri, 05-Jan-2024

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