OPTIMAL ORDERING POLICIES FOR RETAILER WITH FIXED LIFE TIME DEFECTIVE ITEMS UNDER HOLDING COST CONSTRAINT

This paper proposes a retailer’s profit maximization model where retailer receives credit period from the manufacturer as well as offer it to end users appropriately to raise demand. Items in the inventory are subject to time dependent deterioration and possess a fixed life time. Retailer incurs inspection cost of the goods but receive suitable discounts on the defective goods. In this paper profit is maximized with respect to the cycle time. An algorithm has been proposed to obtain optimal cycle time to maximize retailer’s profit. Numeric examples are presented and sensitivity analysis of parameters is also discussed in detail. Further, holding cost constraint is applied on profit function and sensitivity of profit function towards holding cost constraint is studied. Outcome of this paper can be applied to a huge range of products like readymade garments, fashion accessories, electronics, furniture and home furnishing products.