IMPACT OF CUSTOMER RETURNS AND TRADE CREDIT FOR DETERIORATING ITEMS WITH PRESERVATION TECHNOLOGY INVESTMENT UNDER PRICE-SENSITIVE DEMAND

Abstract

To increase the demand for the product, permissible delay in payment is an essential tool in the corporate world. This paper
focuses on the optimal ordering policies where the supplier gives mutually agreed trade credit to the retailer. In the article, the
synchronized determination of selling price and inventory replenishment when the customer returns the product to the company
are given due importance. The demand is the price-sensitive quadratic type which is more suitable for seasonal products. As
most of the products lose their utility over time, this paper also considers the constant deterioration rate of the product.
Moreover, to reduce the effect of deterioration, many retailers spend money to preserve the product. This model also deals with
the preservation of technology investment. The main aim of this research article is to obtain optimal selling price, cycle time,
and preservation technology investment that maximizes the total profit of the retailer. This model is supported by numerical
examples and also recognized the best scenario of the model by graphical outcomes, in three dimensions. Sensitivity analysis of
major parameters is done to deduce decision-making insights.