An inventory model with time dependent demand and shortages under trade credit policy

- We develop an economic order quantity (EOQ) model over a finite time horizon.
- We study time dependent demand with shortages.
- Delay in payments is considered in this model.

This model investigates an economic order quantity (EOQ) model over a finite time horizon for an item with a quadratic time dependent demand by considering shortages in inventory under permissible delay in payments. Shortages are assumed after variable time T1(< T cycle period). The credit period (m) is known and fixed. The model is derived under three different circumstances depending on the time of occurrence of shortages, credit period, and cycle time. The results are illustrated with the help of numerical examples. The sensitivity analysis of key parameters of the optimal solution is studied with respect to changes in different parametric values. Some special features of the model are discussed.