In this paper, an EOQ model is developed for deteriorating items with a two-level credit period, where demand is depended on both selling price and advertising. The current market conditions highlight the significance of the selling price in customer decision-making process. It is noticed that both the selling price and advertisement effect on demand. As advertising itself may involve cost, if it effectively leads to increased demand, it can ultimately minimize the total cost of the product in an inventory model. Trade credit emerges as one of the most effective promotional strategies. Therefore, this research paper formulates an EOQ model under a two-level trade credit policy. In this policy, suppliers offer a permissible delay period to retailers, who in turn provide partial trade credit to customers. Deterioration is considered at a constant rate. The primary purpose of this paper is to reduce the overall inventory cost. Numerical examples are illustrated and sensitivity analysis is carried to highlight the findings of the suggested inventory model.
Cite this paper
Chabukswar, S. L. and Gite, S. (2024). An EOQ Model for a Deteriorating Item with Two-Level Trade Credit Period under Selling Price and Advertisement Dependent Demand. Open Access Library Journal, 11, e1948. doi: http://dx.doi.org/10.4236/oalib.1111948.
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