An Economic Order Quantity Model for Items Having Linear Demand under Inflation and Permissible Delay

This study considers deteriorating items having linear demand pattern, although this demand pattern is not new and lot of work has been done on this demand pattern. But this study is unique in itself, as in this study constant part of linear demand changes with each cycle, thus it gives better picture of demand then earlier models. The earlier models used to consider the constant factor of linear demand pattern as constant for the whole year which is an absurd. In this paper, the effect of permissible delay in payments is also considered, which is usual practice in most of the business i.e. purchasers are allowed a period to pay back for the goods brought without paying any interest. To make it more suitable to the present environment the effect of inflation and time value of money is also considered. As, the product considered in this paper are perishable product, hence shortages are allowed and are fully backlogged. The effect of inflation and time value of money are also taken into account. Numerical illustrations are also incorporated to show, the effect of changing constant part of linear demand after each cycle.