An application of an Inventory Model with price Distribution

The purpose of this study is to investigate the impact of trade credit in the inventory system. It explores an inventory system with noninstantaneous replenishment under conditions of permissible delay in payments. In practice, the supplier allows a certain fixed credit period to settle the account for stimulating retailer’s demand. Besides, the supplier can offer cash discount to encourage retailer to pay the account quickly. This study develops an inventory model of non instantaneous replenishment under cash discount and permissible delay in payments. The purpose of this study is to determine the optimal replenishment policies under conditions of non instantaneous receipt under cash discount and permissible delay in payments and also to find the optimal order quantity, order cycle and total relevant cost per unit time is minimized. Numerical examples are presented to illustrate the propose model.