OPTIMIZATION OF CHANNEL PROFIT FOR DETERIORATING ITEMS UNDER PERMISSIBLE DELAY IN PAYMENTS WHEN END DEMAND IS PRICE SENSITIVE

Abstract

This paper considers the seller - buyer channel for deteriorating items in which the demand rate is expressed as a function of price and the seller may offer the credit period to the buyer. We determine the optimal cycle length and unit-selling price charged by the buyer and optimal per unit price and the length of credit period offered by the seller, which jointly maximizes the channel profit. The numerical solution of the model is obtained and the sensitivity of the parameters involved in the model is also examined.