In the traditional economic order quantity (EOQ) model, it is assumed
that the demand rate is constant. Thereafter, many researchers developed inventory
model with time-varying demand to reflect sales in different phases of product
life cycle in the market. However, in practice, especially for fashionable and
high-tech product, the demand rate during the growth stages of its life cycle
increases significantly with linear or exponential in the growth stage and then
gradually stabilizes, and remains near constant in the maturity stage. It can
be taken a ramp-type demand rate into account. Furthermore, in today’s supply
chain, a supplier usually offers a permissible delay in
payment to retailers to encourage them to buy more products, and a retailer in
turn provides a downstream trade-credit period to its customers. Therefore,
this paper focus on 1) ramp-type demand rate and 2) the upstream and downstream
trade credit financing linked to order quantity for retailer is considered. The
objective is to find the optimal replenishment cycle and order quantity to keep
the total relevant cost per unit time as minimum as possible. The study shows
that in each case discussed, the optimal solution not only exists but also is
unique. Numerical examples are provided to illustrate the proposed model.
Finally, some relevant managerial insights based on the results are characterized.
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