Decision Support Model with Default Risk under Conditional Delay

P.K.Tripathy ¹ , Anima Bag²

1. Department of Statistics, Utkal University, Bhubaneswar, India.
2. Department of Statistics, Utkal University, Bhubaneswar, India.

Correspondence should be addressed to: animabag82@gmail.com.

Section:Research Paper, Product Type: Isroset-Journal
Vol.5 , Issue.2 , pp.40-45, Apr-2018

CrossRef-DOI:   https://doi.org/10.26438/ijsrmss/v5i2.4045

Online published on Apr 30, 2018

Copyright © P.K.Tripathy, Anima Bag . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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Abstract :
To establish long term relationship with the customers and survive in the business scenario the supplier frequently offers a credit period to its customers to make the payment. This attracts the new customer and hence boosts market demand. On the contrary the presence of credit period leads to default risk for the supplier. In this paper an inventory model is developed which deals with credit period dependent quadratic demand and default risk associated with sales revenue. Deterioration rate under natural environment is also incorporated with the inventory model. Seller’s optimal decision to set the permissible credit period for the customer and purchase quantity is discussed here. For profit maximization, environmental concerns of deterioration are also incorporated in to purchasing decision. A solution procedure is given for finding the optimal solution of total profit. Numerical example is given to show the effectiveness of the model. Finally sensitivity analysis is carried out to explore the managerial implications.

Key-Words / Index Term :
Inventory, Environment, Trade Credit, Default Risk, Deterioration

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