OPTIMAL ORDERING POLICY FOR DETERIORATING ITEMS UNDER THE DELAY IN PAYMENTS IN DEMAND DECLINING MARKET 1

In this paper, an attempt is made to characterize the inventory model for deteriorating items in a declinating market whenthe supplier offers a permissible delay in payments to the retailer to settle the account against the purchases. The algorithmis exhibited for a retailer to determine the optimal procurement quantity which minimizes the total inventory cost per timeunit. A numerical example is given to demonstrate the flow of the optimal decision for the retailer. The sensitivity iscarried out to analyse the changes in the optimal solution with respect to deterioration rate of units in inventory and the rateof change of demand.