Ordering Policy for Deteriorating Items with In-Transit Deterioration and Permissible Delay in Payments

In the classical deterministic models of inventory replenishment policies for the deteriorating items, the in-transit deterioration is seldom considered. However, in practices. the length of lead time has a significant impact on the extent of deterioration of the fresh items. The paper proposes an inventory model in which products deteriorate in both in-transit and on-hand period with different deterioration rates under permissible delay of payment. Different facets of the permissible delays in payment were discussed. It is proved that there exists unique optimal ordering cycle to minimize the annual cost under every scenario. Numerical examples were conducted to illustrate the effectiveness of the proposed model. Results show that the optimal ordering cycle is affected by the length of lead time and the deterioration rates, as well as the credit period.