A Two-warehouse Inventory Model with Linearly Time Varying Demand under Permissible Delay in Payments

As a matter of fact, the capacity of any warehouse is limited, so a firm has to hire a warehouse called rented warehouse (RW) for storing the excess units over the fixed capacity W (say) of the own warehouse (OW). Practically the RW is assumed to offer better storing facilities than the OW, which results in a lower rate of deterioration and is supposed to charge higher holding cost than the OW. In this paper a two-warehouse inventory model for deteriorating items is considered with linearly time varying demand under the permissible delay in payments. Also we assumed that the interest charged by the supplier after trade credit period is not necessarily higher than the interest earned as the retailer may invest the revenue in different schemes that may give better return (e. g. in share market, mutual fund, real estate etc). The purpose of this paper is to find the optimal replenishment policy to minimize the total relevant inventory cost. Numerical examples are also provided to illustrate the proposed model. Sensitivity analysis with respect to the parameters is also carried out.