Inventory Modelling for technology generation products under uncertain trade credit terms and imprecise procurement costs

Author(s):

  • Gaurav Nagpal1 (Birla Institute of Technology and Science Pilani, Rajasthan, India)
  • Udayan Chanda1 (Birla Institute of Technology and Science Pilani, Rajasthan, India)
  • Alok Kumar1 (FORE School of Management, New Delhi, India)
  • Naga Jasti1 (Birla Institute of Technology and Science Pilani, Rajasthan, India)

Abstract:
The inventory policies for any product under the trade credit mechanism are influenced by the procurement price per unit and the credit period offered by the seller to the buyer. This paper develops an inventory model for the technology generations under the imprecise trade credit period and the imprecise procurement cost. It considers the demand that is credit-linked and governed by innovation diffusion as well. The imprecise nature of the parameters is captured by the use of fuzzy numbers. The trapezoidal membership function has been used to fuzzify the profit function with the imprecise parameters, and then the centroid method is used to de-fuzzify the profit. The numerical illustrations have been performed, followed by the sensitivity analysis with the launch timing of the second generation product. A few important implications for the inventory practitioners and the possible extensions of this work have also been discussed.

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