REPLENISHMENT POLICY FOR INSTANTANEOUS DETERIORATING ITEMS IN A TWO-LEVEL STORAGE FACILITY WITH PRICE AND STOCK DEPENDENT DEMAND, POSITIVE STOCHASTIC LEAD TIME UNDER THE EFFECT OF CREDIT FINANCING POLICY AND PARTIAL BACKLOGGING SHORTAGES

Abstract

  This paper develops a Positive Stochastic Lead time - Sensitive EOQ model for Instantaneous deteriorating items in a two-level storage facility with   price and stock dependent demand. This model incorporates positive stochastic Lead time which in real scenario will affect the customers goodwill due to long delay or supply of goods. To overcome this situation we are allowing trade credit financing policy to retain customers goodwill. Shortages are allowed and are partially backlogged. The backlogging rate is assumed to be inversely proportional to the waiting time of the next replenishment. This model includes positive stochastic Lead time which allows adjustments to reduce replenishment delay at an associated crashing cost. By minimizing Lead time, we can avoid the large stockout order which would increase holding cost to very large extent that affect the total inventory cost in every cycle time. The objective is to minimize the total relevant cost with optimal cycle time. Numerical examples are provided to elucidate the applicability of the model. The effectiveness of the sensitivity analysis on key parameters such as Lead time, deterioration rate and trade credit period are demonstrated graphically. This model integrates Lead time reduction with trade credit to lower holding costs, to relieve financial pressure and improve flexibility, thereby minimizing total cost and enhancing supply chain efficiency.