An EOQ model with noninstantaneous receipt and exponentially deteriorating items under two-level trade credit

This paper considers the impact of the trade credit policy on the classical Economic Production Quantity (EPQ) model for an item subject to exponential decays. Essentially, this study focuses on an exponentially deteriorating item under the conditions of the retailer receiving the supplier trade credit and providing the customer trade credit simultaneously so as to minimize the average total cost. A theorem is developed to determine the optimal replenishment policies. The main contribution to literature is the inclusion of the latter type of payment delay. Finally, through numerical examples, sensitive analysis shows the influence of key model parameters. Keywords: Inventory; Deteriorating item; EPQ model; Replenishment policies; Trade credit: Permissible delay in payments