An inventory model for deteriorating items with two levels of trade credit taking account of time discounting (Q973834)

The authors extend the inventory model given by \textit{Y.-F. Huang} [J. Oper. Res. Soc. 54, No. 9, 1011--1015 (2003; Zbl 1097.90501)] who investigated the retailer's optimal inventory policy under two levels of trade credit. In particular, the new paper considers the impact of a replenishment policy on the timing of the cash flows associated with payments to suppliers and revenue streams from customers. A mathematical model is presented and analyzed which uses the net present value instead of the average cost objective. It also incorporates deteriorating effects into this inventory model. To determine an optimal ordering policy, the discounted cash flow approach is applied, and it is shown that the optimal solution is uniquely determined (Theorem 1). In addition, a numerical example for illustration is given.