Optimal Preservation Technology Investment, Credit Period and Ordering Policies for Deteriorating Inventory under Credit Period Dependent Quadratic Demand

The supplier presents its buyer a credit period to settle the account which attracts more buyers and increases market demand. However, the offer of credit period invites default risk for the supplier. In this paper, we also implement efficient preservation technology for our inventory system of deteriorating items. The demand is considered to be quadratic and is dependent of permissible trade credit. The objective is to maximize the total profit per unit time with respect to optimal investment to be made, credit period and procurement quantity. Numerical example is given to illustrate the theoretical results and concavity of total profit is established. Managerial observations are outlined using sensitivity analysis.