Two-warehouse inventory model for deteriorating items with imperfect quality under the conditions of permissible delay in payments

Abstract

Regularly, manufacturing systems produce perfect and imperfect quality items. The perfect items start deteriorating as soon as they enter inventory. On the other hand, the suppliers make a delay in payment in order to motivate their buyers to purchase more products. This paper develops a two-warehouse inventory model that jointly considers the imperfect quality items, deterioration, and one level of trade credit. The proposed inventory model optimizes the order quantity to maximize the total profit per unit time. Finally, the proposed inventory model and its solution procedure are validated with numerical examples and a sensitivity analysis is done to show how inventory model reacts to changes in parameters.