An inventory policy for perishable products with permissible delay in payment

Abstract

For perishable products, the seller usually asks for the buyer to prepay a fraction of the purchasing cost as a good-faith deposit, to pay some cash upon the receipt of the order, and then a permissible delay is granted on the remaining of the purchasing cost. In addition, it is evident that the deterioration rate ages to 100% as time reaches the expiration date. In this paper, we incorporate the above two important and relevant facts to find the optimal cycle time and the fraction of no shortages such that the total profit is maximized. Several managerial insights are presented.