OPTIMAL ORDERING POLICY IN DEMAND DECLINING MARKET UNDER INFLATION WHEN SUPPLIER CREDITS LINKED TO ORDER QUANTITY

In this research paper, a lot-size model is proposed when supplier offers the retailer a credit period to settle the account if the retailer orders a large quantity. The proposed study is meant for demand declining market. Here, the retailer needs to arrive at a static decision when demand of a product is decreasing and on the other side the supplier offer the credit period if the retailer orders for more than pre - specified quantity. Shortages are not allowed and the effect of inflation is incorporated. The objective to minimize the total cost in demand declining market under inflation when the supplier offers a credit period to the retailer if the ordered quantity is greater than or equal to pre - specified quantity. An easy - to - use flow chart is given to find the optimal replenishment time and the order quantity. The mathematical formulation is supported by a numerical example. The sensitivity analysis of parameters on the optimal solution is carried out.