The results of this paper not only provide a valuable reference for
decision-makers in planning and controlling the inventory but also
provide a useful model for many organizations that use the decision
rule to improve their total operation cost. In this paper, we formulated
an EPQ-based inventory model for deteriorating items that
investigates retailer’s decision making right in a supply chain under
some realistic features. First, the supplier is willing to provide the
retailer a full trade credit period for payments and the retailer offers
the partial trade credit period to his/her customers Second, the retailer’s
trade credit period (M) offered by the supplier is not necessarily
longer than the customer’s trade credit period (N) offered by
the retailer. Third, the replenishment rate is finite. Lastly, the selling
items are perishable such as fruits, fresh fishes, gasoline, photographic
films, etc. These assumptions are consistent with economic
senses. We develop some effective and easy-to-use theorems to
help the decision maker to find the optimal replenishment policy.
Theorems 1–4 give the decision rule of the optimal ordering policy
for the retailer when M P N. Theorems 5–7 give the decision rule of
the optimal ordering policy when M < N. Then we deduce Huang’s
model (2007b), Chung and Huang’s model (2003), Huang’s model
(2003) and Goyal’s model (1985) as particular cases of this paper.
Numerical examples are given to illustrate all effective theorems
and obtained a lot of managerial insights. In practice, the contributions
of this paper and the approach we considered to solve the
problem are significant because the retailer has to decide whether
it is worthwhile to alter the regular ordering pattern to exploit
other opportunities and assess their monetary impact to find the
optimal ordering policy under realistic conditions linking marketing
as well as operations management concerns. Finally, this paper
brings attention into the trade credit that is of major importance in
the operations of enterprises in many economics. A future study
will further incorporate the proposed model into more realistic
assumptions, such as probabilistic demand, allowable shortages,