An Integrated Deteriorating Inventory Model with Imperfection Inspection, Variable Demand, and Trade-Credit under Inflation

Abstract

This study develops an inventory model addressing the complexities of deteriorating items under an imperfection inspection policy, variable demand influenced by time and selling price, and trade-credit financing in the presence of inflation. Imperfections in inventory are identified through a comprehensive inspection process, minimizing the impact of defective items on overall operations. Demand is assumed to vary dynamically, reflecting dependencies on temporal factors and pricing strategies. The trade-credit policy, allowing for delayed payments, introduces additional flexibility for retailers while influencing inventory decisions. Inflation is incorporated to reflect its impact on cost structures and purchasing power, further enriching the model's practical relevance. Through mathematical formulations and numerical analyses, the model provides actionable insights into optimizing inventory policies, balancing the costs of deterioration, inspection, and trade-credit, and adapting to market conditions. The findings offer valuable strategies for businesses managing deteriorating inventories in fluctuating economic environments.