Title: An integrated production inventory model for perishable products with trade credit period and investment in preservation technology

Authors: Shilpy Tayal; S.R. Singh; Rajendra Sharma

Addresses: Department of Mathematics, Graphic Era University, 566/6 Bell Road, Clementown, Dehradun, India ' Department of Mathematics, D.N.(P.G.) College, Meerut, India ' Department of Mathematics, Graphic Era University, Dehradun, India

Abstract: In this paper we develop an integrated production-distribution model for deteriorating items in a two-echelon supply chain. The objective of this study is to develop an integrated inventory policy when the retailer invests on the preservation technology to reduce the product rate of deterioration and to investigate the model under conditions of permissible delay in payment and allowable shortages. This paper incorporates the concept of a credit period and develops a new inventory model to reflect real-life situations. Exact cost functions for the supplier, the buyer and the entire supply chain are developed. We outline a procedure for determining the optimal supply chain decisions with the objective of minimising the total system cost. Our approach is illustrated through a numerical example. Sensitivity analysis is also presented to illustrate this model.

Keywords: deterioration; integrated inventory; permissible delay; preservation technology; partial backlogging; production inventory modelling; perishable products; trade credit; deteriorating items; two-echelon supply chains; supply chain management; SCM; payment delay.

DOI: 10.1504/IJMOR.2016.074852

International Journal of Mathematics in Operational Research, 2016 Vol.8 No.2, pp.137 - 163

Received: 22 Feb 2014
Accepted: 19 Jul 2014
Published online: 21 Feb 2016 *

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