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Research Paper | Mathematics | Volume 15 Issue 7, July 2026 | Pages: 334 - 342 | India
An Inventory Model for Deteriorating Item Withfull Advance Payment and Price Discount Policy
Abstract: This paper develops an inventory model for deteriorating items under a full advance payment policy with vendor-provided price discounts. The retailer covers the advance payment through a loan from a financial institution and repays the loan using sales revenue and earned interest. Two cases are considered depending on whether the accumulated revenue and earned interest is sufficient to meet the loan repayment obligation. The model incorporates price-dependent demand, constant deterioration, variable holding costs, discount benefits, loan interest, earned interest, and penalty charges. The objective is to determine the optimal selling price and replenishment cycle length that maximize the retailer's profit. Numerical examples and sensitivity analysis demonstrate the applicability of the model. The results indicate that demand parameters, purchasing cost, and financing-related factors significantly affect profitability, providing valuable managerial insights for inventory and financial decision-making.
Keywords: Deteriorating items, Advance payment, Price discount, Price-dependent demand, Profit maximization
How to Cite?: Dhir Singh, Naresh Kumar, "An Inventory Model for Deteriorating Item Withfull Advance Payment and Price Discount Policy", Volume 15 Issue 7, July 2026, International Journal of Science and Research (IJSR), Pages: 334-342, https://www.ijsr.net/getabstract.php?paperid=SR26704162345, DOI: https://dx.doi.org/10.21275/SR26704162345