Optimal Pricing and Lot Sizing Policy with Time-dependent Demand Rate under Trade Credits

Large number of researcher papers has been published for inventory lotsize models under trade credit financing by assuming that demand rate is constant. But demand rate is often not constant. During the growth stage of the product life cycle, the demand function increases with time. In this paper we extend the constant demand to timedependent demand. This paper derives the problem of determining the retailer’s optimal price and optimal total profit when the supplier permits delay in payments for an order of a product. In this paper demand rate is considered as a function as a function of price and time. We also provide the optimal policy for the customer to obtain its maximum annual net profit. Mathematica software is used for finding optimal price and optimal replenishment time simultaneously. Finally, numerical examples and sensitivity analysis are given to illustrate the theoretical results.