INVENTORY MODEL FOR A NON-INSTANTANEOUS

DETERIORATING ITEM WITH PRESERVATION

TECHNOLOGY INVESTMENT, TRADE CREDIT AND
PARTIAL BACKORDERING
Anamika Sharma and Geetanjali Sharma*
Banasthali Vidyapith, Rajasthan- -304022, India
[Link]@[Link]; [Link]@[Link]
*Corresponding Author
ORCID ID 0000-0001-7814-1637
Abstract
This research formulates an inventory optimization model for non-
instantaneous deteriorating items, with demand modeled as a
dynamic function of price-dependent and time-sensitive fluctuations
. Through the combined use of preservation technology, trade credit
financing, and partial backordering, the model provides a holistic
approach to optimizing inventory management. Preservation
technology investment is analysed for its impact on reducing
deterioration rates, thereby extending the shelf life of products.
Trade credit terms are evaluated as a financial strategy to enhance
cash flow and align payment cycles with revenue generation.
Additionally, the model includes partial backordering to manage
shortages effectively, balancing customer service levels with
inventory costs. Analytical methods are employed to derive optimal
policies for ordering, pricing, and backordering, aiming to
maximize the overall profit. This study aims to explore how
preservation technology and trade credit can reduce product
deterioration and provide financial flexibility for retailers in
perishable goods industries like food, pharmaceuticals, and
electronics. This approach determines the optimal selling price and
preservation technology investment to achieve maximum
profitability. Computational results and sensitivity analyses are
conducted to validate the model's practical applicability and provide
insights into the complex relationships between preservation
investments, trade credit, and backordering in dynamic market
settings. The findings suggest that strategic investments in

1
preservation technology, combined with flexible trade credit terms
and efficient backordering policies, can significantly improve
inventory performance and profitability in industries dealing with
perishable goods.
Keywords – non-instantaneous deterioration, trade credit,
preservation technology, partial backlogging
AMS subject classification code : 90 Operations Research,
mathematical programming
1. Introduction and literature review
In today's highly competitive and dynamic market environment,
managing inventory effectively is crucial for businesses,
particularly those dealing with perishable or deteriorating items.
Traditional inventory models often assume instantaneous
deterioration, which does not adequately reflect the reality faced by
many industries where items deteriorate over time. This study
bridges the existing research gap in managing non-instantaneous
deteriorating goods by formulating a detailed inventory model that
accounts for the impact of time and selling price on [Link]
perishability of products such as food, pharmaceuticals, and high-
tech components necessitates innovative approaches to inventory
management. Investing in preservation technology has become a
crucial strategy for mitigating the effects of deterioration, thereby
extending product shelf life and improving inventory management.
thereby extending the usable life of products and reducing waste.
However, the decision to invest in such technology must be
balanced against its costs and the anticipated benefits in terms of
reduced deterioration rates.
Financial strategies also play a critical role in inventory
management. Trade credit, a common practice where suppliers
extend payment terms to buyers, can significantly affect a firm's
cash flow and inventory decisions. By aligning payment cycles with
revenue generation, trade credit helps firms manage their working
capital more effectively. This research analyzes the effect of trade

2
credit on inventory management strategies, and how it can be
leveraged to enhance profitability. Furthermore, partial back
ordering addresses situations where demand exceeds supply. Instead
of losing sales entirely, businesses can fulfil backorders once new
stock arrives, maintaining customer satisfaction while balancing
inventory costs. Integrating partial back ordering into the model
provides a more realistic and flexible approach to managing
shortages.
Focusing on non-instantaneous deteriorating inventory, This
research aims to develop a comprehensive inventory model that
leverages trade credit, preservation technology investment, and
partial backordering. The goal is to empower decision-makers with
a robust framework for optimizing inventory policies, given the
complex demand dynamics influenced by time and price. This paper
reviews the relevant literature on inventory management,
preservation technology, trade credit, and back-ordering strategies.
We present the mathematical formulation of our model, followed by
the derivation of optimal policies. Numerical examples illustrate the
model's practical application, and Parametric analyses evaluate the
influence of key parameters on inventory performance. Our results
have several implications of our findings and Potential avenues for
further research. The concept of non-instantaneous deteriorating
inventory recognizes that items remain stable for a certain period
before deterioration sets in. Pioneering work by The inventory
model framework introduced by Ghare and Schrader (1963) has
been influential in the context of exponential deterioration items,
laying the groundwork for subsequent research on deteriorating
inventory. Goyal (1985) investigated first-time trade credit with an
inventory model. More recent studies, such as those by Balkhi et al.
(2001), have expanded on this by considering non-instantaneous
deterioration and its impact on inventory policies. These models
often assume that deterioration follows a known function over time,
allowing for more accurate inventory levels and order quantity
predictions. Huang (2006) investigated an inventory model for
limited storage space devices with a trade credit policy and also
considered a sustainable environment. Gupta and Wang's (2009)

3
analysis of retail operations under uncertainty reveals. The optimal
policy structure is unaffected by variations in credit terms the
optimal policy framework, the policy parameter's value, however, is
influenced. In contrast, a continuous-time Framework was proposed
for optimizing inventory levels. A study by Min et al. (2010)
developed a lot-sizing framework for perishable goods with demand
rates dependent on current inventory levels and flexible payment
terms resulting in benefits for the retailer from a Specified payment
delay from the supplier and extends it to customers to enhance
market competitiveness.

Research conducted by Chung et al. (2014) developed an EPQ

framework tailored to perishable goods, incorporating supplier-
retailer credit arrangements., Under a delayed payment arrangement
with the supplier the retailer, in turn, offers trade credit to
customers. Research by Molamohamadi et al. (2014) focused on
developing an EPQ inventory model with backordering, considering
delayed payments and instantaneous deterioration.

Research conducted by Jaggi et al. (2015) introduced an inventory

model to minimize costs by optimizing cycle duration and stock-in
time. Building on Mahata's (2012) research, Sarkar et al. (2015)
introduced advancements by incorporating dynamic product
deterioration including trade-credit policies for suppliers and
retailers, with hybrid trade credit arrangement that is featuring full
credit from suppliers to retailers and partial credit from retailers to
customers.. This promotes need of store to place bulk orders, which
enables the company to lease more storage space. This gives the
direction to develops a two-warehouse inventory model for non-
instantaneous deteriorating commodities with permitted payment
delays in light of inflation's impact a scenario. A pricing and
inventory control model was proposed by Maihami et al. (2017) for
non-instantaneous deteriorating items, incorporating a dual-tier
credit system.. In this model, a credit chain is formed, with the

4
supplier granting credit to the retailer and the retailer granting credit
to customers.. Partially backlogged shortages and a probabilistic
demand function are utilised. Giri and Sharma (2016) investigated
an an inventory system featuring linear demand variation over time,
two-tier credit financing, and flexibility for [Link]
analyzed various scenarios investigating the link between supplier
and retailer credit periods, they determined the conditions for an
optimal outcome.

Anchal et al. (2016) Constructed an inventory decision-making

framework for deteriorating items, focusing on the retailer's optimal
replenishment policy under permissible payment delays. Tiwari et
al. (2016) Suggested an inventory management strategy,
highlighting in which suppliers offer acceptable payment delays to
retailers to boost demand in a competitive business environment.
Geetha and Udayakumar (2018) proposed proposes two distinct
inventory models for managing non-instantaneous deteriorating
items: one for single-warehouse scenarios and another for two-
warehouse [Link] The goal was to identify the most suitable
replenishment duration and Optimal inventory replenishment
quantity.
Lashgari et al. (2018) designed an EOQ model for products with
non-instantaneous decay incorporating a dual payment structure.
According to it this scheme combines advance payments with
delayed payments, where the advance payment for a portion of the
order, with the balance due after delivery or within a specified
period. after receiving the [Link] et al. (2019) researched an
inventory control model that incorporates delayed payment policy
with cash discounts in inflationary environments. Babangida and
Baraya (2019) presented inventory framework for perishable goods
included Bi-component demand pattern and holding costs
dependent on time, with delayed payment options, assuming time-
dependent quadratic demand until degradation occurs.

5
 Research by Lin et al. (2019) focused on developing an inventory
model that considers both two-stage deterioration and supplier
financing allowing for shortages without partial backlogging. 2. An
EOQ model for perishable goods under a dual-level payment delay
arrangement was examined by Mashud et al. (2019)., considering
two demand functions with fully backlogged shortages.

Shaikh and Cardenas-Barron (2020) explored an inventory system

with non-instantaneous deterioration and price-dependent demand.
An inventory model with advertisement-dependent demand and
trade credit was investigated by Md. Mashud et al. (2020)..

Sharma et al. (2020) aimed to identify optimal retail strategies to

maximizing total profit Showing the presence of a unique the Most
effective [Link] et al(2020a) formulated a inventory cost
optimization model with two warehouses and supplier financing
financing for inventory items In the presence of uncertain demand
and product spoilage. Kumar et al. (2020b) proposed an model for a
Dual-warehouse setup with dynamic storage costs and Time-
dependent demand decline under trade credit arrangements
also considered partially backlogged. Nayak et al. (2021) proposed
a Fuzzy logic-based inventory replenishment approach Stocked
product management with Weibull degradation and Demand with a
constant slope under fully backlogged shortages. They used graded
mean preference integration strategy and Fuzzy optimization
problems targeting to total cost reduction per unit time.

Das et al. (2021) developed a non-instantaneous deteriorating

inventory model incorporating preservation technology Multiple
payment periods, and variable time dependent demand on inventory
level and selling price.

6
Babangida and Baraya (2021) investigated an inventory model for
gradual decaying items demand Bi-phase demand rates, Time-
sensitive holding expenses, and delayed payment option with partial
backlogging.

Mashud et al. (2021) examined Price-advertisement responsive

demand model, gradual decaying model with preservation
investment, partial lost sales, and delayed payment.

Kumar et al. (2022a) developed Dual inventory models for Weibull-

distributed deteriorating items with price-sensitive demand and
lead-time under advance payment and post-payment scenarios.
Kumar and Paikray (2022) proposed an inventory model for
Perishable goods with trapezoidal demand function in both crisp
and Stochastic environments
Tripathy et al. (2022) discussed an Stock management model based
on dynamic trade credit policy for non-instantaneous decay items,
considering various financial scenarios. Kumar et al. (2022b)
formed an inventory model incorporation with trade credits,
inventory-dependent demand, partial backlogging, and non-
instantaneous degradation under inflation.

Nayak and Sahoo (2023) developed an EOQ model assuming

demand and other relevant factors Hatibaruah and Saha (2023)
determined the optimal cycle time, Expenditure in preservation
technology, frequency of advertisements, and timing of peak stock
status and shortages to Optimize the system's average profit per
unit period. An Strategy was proposed to extract most effective
approach from the constructed model.

7
Nayak et al. (2024) studied an EOQ model with continuous
deterioration, power-pattern demand, Weibull amelioration,
allowable total backlog shortages, and imprecise expenses in crisp
and fuzzy scenarios, developing a mathematical inventory model
and solution strategy.

Tripathi (2024) presented Inventory control system with sellkng

price-dependent demand, considering decaying and payment delay
policy. Patra et al. (2024a) recommended a model with power-
pattern demand, cost in preservation technology, and trade credit,
including a learning effect on holding costs.

Patra et al. (2024b) examined a retailer's stock system to determine

the optimal plan for cost optimization under given constraints,
including power-pattern demand, Persistent degradation, and
uncertain costs.

Shah et al. (2024) aimed to find Optimal stock control plan for 5.
Phased deteriorating products with multivariate stocastic demand,
incorporating dual-level trade credit financing and preservation
technology. The demand for the decaying product is effected by
price, inventory, and Ad repetition, and the supplier includes price
discounts and trade credit programs to increase revenue.

Table 1: literature review table

Authors Demand Deteriorati Preservati Shortages Trad
pattern on on e
technolog cred
y it

8
Dye and Constan Time Yes Partial No
Hsieh t dependent backorderi
(2012) ng
He and Price Constant Yes No No
Huang depende
(2013) nt
Zhang Price Constant Yes No No
et al. depende
(2014) nt
Lu et al. Price Constant No No No
(2016) and
stock
depende
nt
Li et al. Price Non Yes No No
(2019) depende instantane
nt ous
Mishra Price Constant Yes No Yes
et al. depende
(2018) nt
Khanra Time Constant No Partial Yes
et al. depende backorderi
(2013) nt ng
Annadur Credit Constant No Partial Yes
ai et al. period backorderi
(2013) depende ng
nt
Shaikh Stock Constant No Partial Yes
et al. depende backorderi
(2021) nt ng
Tripathi Time Constant No Partial Yes
et al. depende backorderi
(2022) nt ng
Present Time Constant yes Partial Yes
paper and backorderi
price ng

9
 Our review of the literature indicates that trade credit policies
for non-instantaneous deteriorating items with partial shortages
have not been explored. This study fills that gap by presenting a
comprehensive inventory model that accounts for these factors.

[Link]
1. Demand is modeled as D(p,t) = a - bp + ct, capturing price
and time-dependent dynamics.
2. The decaying rate is supposed to be constant.
3. For the duration of the study, deteriorated products are
neither replaced nor repaired.
4. The deterioration rate is influenced by investment in
preservation technology, represented by the function
2
−dξ ∂ m(ξ ) ∂ m (ξ)
m ( ξ )=e and satisfy the conditions <0, >0.
∂ξ ∂ ξ2
Our literature review reveals a gap in research on trade
credit policies for non-instantaneous deteriorating items
with partial shortages. This study addresses that gap by
developing a comprehensive inventory model that
incorporates these factors.
5. During stock-out periods, the backlogging rate is a function
of the waiting time for the next replenishment, given by
1
, where δ is a backlogging parameter, and (T − t)
1+ δ ( T −t )
is the waiting time.
[Link]

Table 2 - Represents the notation that are used in this

model
Parameters Units Descriptions
I 1 (t) - Inventory between the time 0 to
t 1.

10
 I 2 (t) - Inventory between the time t 1 to t 2
.
I 3 (t) - Inventory between the time t 2 to T
.
t1 Week/cycle Time where items are started to
deteriorate.
t2 Week/cycle Time where shortage started.
T Week/cycle Total cycle time.
a - Scaling factor of demand.
b - Scaling factor of demand.
c - Scaling factor of demand.
p Rupees/item Selling price.
θ - Deterioration rate.
δ - Backlogging parameter.
ξ Rupees/unit Preservation technology cost.
d - sensitive parameter of investment
to the deterioration rate.
S Kg/item Initial inventory level.
B Kg/item Maximum shortage quantity per
cycle.
Ch Rupees/item Holding cost per unit.
O Rupees/item Ordering cost per unit.
Sc Rupees/item Shortage cost per unit.
Sl Rupees/item Lost sale cost per unit.
e Rupees/item Purchasing cost per unit.
M Weeks/cycle Trade credit period time.
Ie % Interest earns
Ic % Interest charge
Decision variable
ξ Rupees/item Preservation technology cost
p Rupees/item Selling price
Now in this section we discussed mathematical model of this
problem and explain the solution after forming differential
equations-

11
 2. Mathematical modelling
Fig:1- represents the stock inventory level, the x-axis represents

𝑡1, inventory decreases due to demand and then inventory

time, and the y-axis represents the inventory level. Firstly, till time

decreases due to demand and deterioration. After that, at the time 𝑡2

inventory becomes zero, and at 𝑇, the maximum shortage becomes
high. The differential equations of this inventory model are written
below-

Inventory
Non instantaneous period

Use preservation technology

t2
T

0
t1 -B Time

Fig:1 Graphical representation of inventory vs.

time

12
d I1 (t)
=−( a−bp+ ct ) , 0 ≤ t ≤ t 1
dt
(1)
d I2 (t)
=−θm ( ξ ) I 2 ( t )−( a−bp+ ct ) , t 1 ≤ t ≤ t 2
dt
(2)
d I 3 ( t ) −D ( p ,t )
= ,t ≤t ≤T
dt 1+δ ( T −t 1 ) 2
(3)
Equation (1) represent differential equation for interval [0 ,t 1 ],
equation (2) represents differential equation for interval [t 1 , t 2 ] and
equation (3) represents differential equation for interval [t¿¿ 2 , T ]¿ .
With boundary conditions
I 1 ( 0 )=S , I 1 ( t 1 ) =I 2 ( t 1) , I 2 ( t 2 )=0 , I 3 ( t 2 )=0 , I 3 ( T ) =−B
(4)
Solution of equations (1), (2) and (3) using these conditions are:
2
ct
I 1 ( t )=S−( a−bp ) t−
2
(5)

I 2 ( t )=
( ( a−bp )
−
c
θm ( ξ ) ( θm ( ξ ) )2
)
( e θm( ξ ) (t −t )−1 ) + c (t 2 eθm (ξ ) ( t −t )−t )
2

θm ( ξ )
2

(6)

I 3 ( t )=
( a−bp
δ
cT c
+ +
δ δ ) log
( 1+δ (T −t ) )+ δ ( t−t )
1+ δ ( T −t ) c
2
2
2

(7)

13
and also B=
( a−bp
δ
cT c
+ +
δ δ ) 2
c
log ( 1+δ ( T −t ) ) + ( t −T )
δ 2 2

(8)
2

( )
c t 1 a−bp c
S= ( a−bp ) t 1 + + + 2
( eθm (ξ )( t −t )−1 ) + c ( t 2 e θm (ξ ) (t −t )−t 1)
2 2

2 θm ( ξ ) ( θm ( ξ ) ) θm ( ξ )

(9)
Total quantity per unit cycle is
2

( ) (
c t 1 a−bp c
Q=S+ B=( a−bp ) t 1+ + + 2
( e θm( ξ ) (t −t ) −1 ) + c (t 2 eθm (ξ ) ( t −t )−t 1 )+ a−bp + cT +
2 2

2 θm ( ξ ) ( θm ( ξ ) ) θm ( ξ ) δ δ
(10)
Now calculate inventory costs:
1. Ordering cost = O
(11)
2. Holding cost for the entire cycle is represented by equation
(12)-
t1 t2

Holding cost= C h∫ I 1 ( t ) dt+C h∫ I 2 ( t ) dt

0 t1

( ) ( ( ) (
2 3 θm ( ξ ) ( t 2−t 1 ) 2 θ m ( ξ ) (t 2−t )
− ( a−bp ) t c t 1 ( a−bp ) −1
1 e c −t 2 t 2 t2 e
Ch − +C h −t 2 + +t 1 + − + +
2 6 θm ( ξ ) θm ( ξ ) θm ( ξ ) θm ( ξ ) θm ( ξ ) 2 θm ( ξ )

(12)
3. Purchasing cost = eQ
(13)

14
 T

4. Shortage cost = −Sc ∫ I 3 ( t ) dt

t2

¿−S c ¿
(14)
T

5. Lost sale cost = Sl∫ D 1−

t2
( 1
1+δ ( T −t )
dt
)
¿ Sl ¿
(15)
6. Preservation technology cost = ξT
(16)
7. Sales revenue = Dp t 2 + pB

¿ Dpt 2 + p
(( a−bp
δ
cT c
+ +
δ δ ) 2
c
log ( 1+δ ( T −t ) ) + ( t −T )
δ ) 2 2

(17)
Here three cases
Table 3- Represents different cases for
credit period.
Case 1 Case 2 Case 3
0 ≤ M ≤ t 1 ≤ t 2 ≤T 0 ≤ t 1 ≤ M ≤ t 2 ≤T 0 ≤ t 1 ≤t 2 ≤ M ≤T

For case 1 - when 0 ≤ M ≤ t 1 ≤ t 2 ≤T

Interest charge- The cost incurred by a buyer for delaying
payment beyond the trade credit period. It represents the
financial penalty or additional expense due to late payment.

(∫ )
t2 t1 t2

IC=e I c ∫ I ( t)dt=I c I 1 ( t ) dt+∫ I 2 (t ) dt

M M t1

15
 ((
¿ I c e S ( t 1−M ) +
a−bp
2
( 2 2 c 3 3
M −t 1 ) + ( M −t 1 ) +
6
1
θm ( ξ ) )(
( e θm (ξ ) (t −t )−1 ) + ( t 1−t 2 ) a−bp − c
2 1

)(
θm ( ξ ) ( θm ( ξ )
(18)
Interest earns- The financial benefit a buyer gains when they
utilize the trade credit period to delay payment, thus allowing
them to use the funds elsewhere to generate income or interest.

( )
M M
( a−bp ) M 2 c M 3
IE= p I e ∫ Dt dt=I e p ∫ (a−bp+ct )tdt=I e p +
0 0 2 3
(19)
For case 2 - 0 ≤ t 1 ≤ M ≤ t 2 ≤T

(( θm1( ξ ) ( e (
t2

IC=e I c ∫ I 2 (t )dt=I c e
M
θm ( ξ ) ( t 2−M )
−1 ) + ( M −t 2)
)( a−bp
θm ( ξ ) ( θm ( ξ ) ) ) θm ( ξ ) θm ( ξ )
−
c
2
+
c 1
(t e
2

(20)

( )
M M
( a−bp ) M 2 c M 3
IE= pI e∫ Dt dt=I e p ∫ (a−bp+ct )tdt =I e p +
0 0 2 3
(21)
For case 3 - 0 ≤ t 1 ≤t 2 ≤ M ≤T
IC=0

[ ] [ ] [( )
T T T T
( a−bp ) M 2 c M 3
IE= pI e ∫ Dt dt+∫ Ddt =I e p ∫ ( a−bp+ ct ) tdt +∫ ( a−bp+ ct ) dt = I e p 2
+
3
+
0 0 0 0

(22)
Now the total profit for this model is
1
TP= (SR−OC−HC −PC−SC−LSC−PTC−IC + IE)
T

16
 {
TP 1 , 0 ≤ M ≤ t 1 ≤t 2 ≤ T
Total profit = T P 2 , 0 ≤ t 1 ≤ M ≤t 2 ≤T
T P 3 , 0 ≤ t 1 ≤t 2 ≤ M ≤T
(23)
1
T P1 ( p , ξ)= ¿ (24)
T
1
T P2 ( p , ξ)= ¿
T
(25)
T P3 ( p , ξ)=1/T ¿ (26)
Equation (24), (25) and (26) represents total profit for Case-1,
Case-2 and Case-3 respectively.
3. Solution methodology
The concavity of the function TP( p , ξ) can be verified using

[ ]
2 2
∂ TP ∂ TP
2
∂ p ∂ p∂ξ
the Hessian matrix (H): H= 2 2
∂ TP ∂ TP
2
∂ξ ∂ p ∂ξ

profit function TP( p , ξ) will be the maximum for the values of

p , ξ the Hessian matrix's principal determinants must fulfill at
p , ξ as
H 11 < 0 and H 22 >0.

The Hessian matrix's strong nonlinearity makes closed-form

proofs hard to obtain.. Consequently, numerical methods were
used to verify the concavity of TP( p , ξ).
4. Numerical analysis
Numerical examples have a significant impact in understanding
the inventory models. They provide clarity, validate theories, aid

17
in decision-making, and enhance problem-solving skills.
Whether in an educational setting or a business environment,
numerical examples are essential for understanding and
optimizing inventory management practices. We have used
mathematica-13 software to validate and solve numerical
section for this model.
Table 4- Represents numerical values for
case-1
Parameters Values Parameters Values
a 50 δ 0.01
b 0.01 Ch 50 Rupees
c 1 Ic 0.5 %
O 50 rupees Ie 0.35 %
d 0.015 Sc 5 Rupees
e 1000 rupees Sl 20 Rupees
θ 0.1 % M 6 Weeks
t1 10 Weeks t2 20 Weeks
T 50 Weeks
Optimal Solution for case -1
Parameters Values
ξ (Preservation technology 25.8789 Rupees
cost)
p (selling Price) 3561.34 Rupees
Total profit 346391 Rupees

H 11 =
1
T ( 2
−b I c M −
δ )
2 bLog ( 1+ ( T −t 2) δ )
=−0.0961646< 0

H 22=0.548342>0
Table 5- Represents numerical values for case-2
Parameters Values Parameters Values
a 50 δ 0.01

18
 b 0.01 Ch 50 Rupees
c 1 Ic 0.5 %
O 50 rupees Ie 0.35 %
d 0.015 Sc 5 Rupees
e 1000 rupees Sl 20 Rupees
θ 0.1 % M 14 Weeks
t1 10 Weeks t2 20 Weeks
T 50 Weeks
Optimal solution for case -2
Parameters Values
ξ (Preservation technology 25.0362 Rupees
cost)
p (selling Price) 3400.4 Rupees
Total profit 446429 Rupees

( ( )
3
1 −1 c M3 1 2 1 1 1 c t c ( t 2−T
H 11 = p b Ic M2 p+Ic + M ( a−bp ) − b Ch t 12− bp t 22 + ( a−bp ) t 22+ 2 +
T 2 3 2 2 2 2 3 δ

H 22=2.37193> 0

Table 6- Represents numerical values for

case-3
Parameters Values Parameters Values
a 50 δ 0.01
b 0.01 Ch 50 Rupees
c 1 Ic 0.5 %
O 50 rupees Ie 0.35 %
d 0.015 Sc 5 Rupees
e 1000 rupees Sl 20 Rupees

19
 θ 0.1 % M 30 Weeks
t1 10 Weeks t2 20 Weeks
T 50 Weeks
Optimal solution for case-3
Parameters Values
ξ (Preservation technology 19.2408 Rupees
cost)
p (selling Price) 3467.29 Rupees
Total profit 780361 Rupees

H 11 =
1
T ( 2 2
−b I c M −b t 2−
δ )
2bLog [ 1+ ( T −t 2 ) δ ]
=−0.153495<0

H 22=0.465187> 0
5. Graphical representation
The graphical representations are showing below for optimal
solutions in different cases.
For case -1

20
Fig:2- shows concavity of total profit with respect to ξ and p for
case 1 0 ≤ M ≤ t 1 ≤ t 2 ≤T x-axis is represented by ξ (Preservation
technology cost), y-axis represented by p (selling price and z-
axis represented by total profit.

TP
For case-2

TP
ξ

p
ξ

Fig:3- shows concavity of total profit with respect to ξ and p for

case 2 0 ≤ t 1 ≤ M ≤ t 2 ≤T x-axis is represented by ξ (Preservation
technology cost), y-axis represented by p (selling price and z-
axis represented by total profit.
For case-3

TP

21
 Fig:4- shows concavity of total profit with respect to ξ and p for
case 3 0 ≤ t 1 ≤t 2 ≤ M ≤T x-axis is represented by ξ (Preservation
technology cost), y-axis represented by p (selling price and z-
axis represented by total profit.
Now, compare the values of total profit, selling price and
preservation technology cost for different cases by graphs which
are shown below-
900000

800000 780361

700000

600000

500000 446429
400000 346391
300000

200000

100000

0
TP

Case 1 Case 2 Case 3

Fig:5- Graph of total profit for all three

cases
From above it is clear that for this model we get maximum
profit in case-3 and minimum profit in case-1 it means we get
maximum profit when trade credit period is between shortage
time.
Fig:6- graph of preservation technology cost for
all three cases

22
30
25.8789
25.0362
25
3600
3561.34
20 19.2408
3550

15
3500
3467.29
10
3450

5 3400.4
3400

0
3350
Case 1 Case 2 Case 3
3300

Case 1 Case 2 Case 3

From above it is clearly seen that we get maximum cost in case
1 and minimum cost in case-3.
Fig:7 – Graph of selling price for all three
cases
From above clearly seen that selling price is maximum for case-
1 and minimum for case-2.
6. Sensitivity analysis
Sensitivity analysis enables us to evaluate to analyse the impact of
input variability on model output. it reveals how model outputs
respond to input adjustments.. This is particularly important in
decision-making processes, where it’s crucial to know which
variables have the most influence on the results and how changes in
these variables can affect the overall performance. In this section
we discussed sensitivity analysis of this model-

23
 Table 7- Represents sensitivity analysis for case-1
0 ≤ M ≤ t 1 ≤ t 2 ≤T

Parameters % ξ p Total
Change profit
a +20 % 29.5299 4058.5 497541
+10 % 27.7608 3809.85 419042
0 25.8789 3561.34 346391
-10% 24.53 3398.38 287644
-20% 21.709 3064.86 218641
b +20 % 25.4376 3015.04 263740
+10 % 25.6592 3263.34 301275
0 25.8789 3561.34 346391
-10% 26.0967 3925.6 401615
-20% 26.3126 4380.98 470737
O +20 % 25.8789 3561.34 346390
+10 % 25.8789 3561.34 346391
0 25.8789 3561.34 346391
-10% 25.8789 3561.34 346391
-20% 25.8789 3561.34 346391
θ +20 % 38.0337 3561.34 346379
+10 % 32.2329 3561.34 346384
0 25.8789 3561.34 346391
-10% 18.8549 3561.34 346398
-20% 11.0027 3561.34 346406
Ch +20 % 26.0361 3561.5 346171
+10 % 25.9576 3561.42 346281
0 25.8789 3561.34 346391
-10% 25.8 3561.25 346501
-20% 25.7209 3561.17 346611
Ic +20 % 26.0486 3588.86 335285
+10 % 25.9767 3575.09 340829
0 25.8789 3561.34 346391
-10% 25.7496 3547.59 351970
-20% 25.5811 3533.86 357568

24
 Sl +20 % 25.8787 3561.37 346227
+10 % 25.8788 3561.35 346309
0 25.8789 3561.34 346391
-10% 25.879 3561.32 346472
-20% 25.8792 3561.3 346554
Table 8- Represents sensitivity analysis for case- 2
0 ≤ t 1 ≤ M ≤ t 2 ≤T

Parameters % ξ p Total
Change profit
a +20 % 28.519 3899.64 621272
+10 % 26.8281 3650 530589
0 25.0362 3400.4 446429
-10% 23.1298 3150.84 368793
-20% 21.093 2901.33 297683
b +20 % 24.7069 2649.84 319545
+10 % 24.8171 2858.33 354772
0 25.0362 3400.4 446429
-10% 25.145 3761.79 507572
-20% 25.2535 4213.53 584029
O +20 % 25.0362 3400 446429
+10 % 25.0362 3400 446429
0 25.0362 3400.4 446429
-10% 25.0362 3400 446429
-20% 25.0362 3400 446429
θ +20 % 42.5271 3445.3 446410
+10 % 37.19909 3400.4 446417
0 25.0362 3400.4 446429
-10% 18.0212 3572.3 446436
-20% 10.1599 3876.4 446444
Ch +20 % 25.548 3872.2 446204
+10 % 25.2931 3762.3 446316
0 25.0362 3400.4 446429
-10% 24.7771 3276.45 446542
-20% 24.5158 3289.5 446655

25
 Ic +20 % 25.9868 3404.16 445017
+10 % 25.5148 3402.28 445723
0 25.0362 3400.4 446429
-10% 24.5507 3398.51 447136
-20% 24.0582 3396.63 447845
Sl +20 % 25.0359 3897.3 446265
+10 % 25.0361 3598.2 446347
0 25.0362 3400.4 446429
-10% 25.0363 38794.09 446511
-20% 25.0364 3517.34 446593
Table 9- Represents sensitivity analysis for case-3
0 ≤ t 1 ≤t 2 ≤ M ≤T

Parameters % ξ p Total
Change profit
a +20 % 22.5974 3966.84 1052242
+10 % 20.9674 3717.05 911499
0 19.2408 3467.29 780361
-10% 17.4047 3217.56 658826
-20% 15.4438 2967.85 546894
b +20 % 19.1159 2904.01 634365
+10 % 19.1784 3160.05 700721
0 19.2408 3467.29 780361
-10% 19.303 3842.82 877711
-20% 19.365 4312.22 999414
O +20 % 19.2408 3467.29 780361
+10 % 19.2408 3467.29 780361
0 19.2408 3467.29 780361
-10% 19.2408 3467.29 780361
-20% 19.2408 3467.29 780361
θ +20 % 36.7317 3467.29 780343
+10 % 31.3955 3467.29 780349
0 19.2408 3467.29 780361
-10% 12.2167 3467.29 780368
-20% 4.36453 3467.29 780376

26
 Ch +20 % 20.4198 3467.52 779896
+10 % 195396 3467.35 780244
0 19.2408 3467.29 780361
-10% 18.9391 3467.23 780478
-20% 18.6345 3467.18 780595
Ic +20 % 15.3452 3224.42 750382
+10 % 17.4355 3398.284 779282
0 19.2408 3467.29 780361
-10% 20.4583 3532.598 803923
-20% 24.3837 3943.34 810293
Sl +20 % 19.2406 3467.31 780197
+10 % 19.2407 3467.3 780279
0 19.2408 3467.29 780361
-10% 19.2408 3467.28 780442
-20% 19.2409 3467.27 780524
7. Observations
For all cases- on increasing in values of different parameters we get
different situations which are shown below-
Table 10- Observation table for all
cases
Case-1 Case-2 Case-3
ξ p TP ξ p TP ξ p TP
a ↑ ↑ ↑ ↑ ↑ ↑ ↑ ↑ ↑
b ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓
O cons cons cons cons cons cons cons cons cons
tant tant tant tant tant tant tant tant tant
θ ↑ cons ↓ ↑ ↑ ↓ ↑ cons ↓
tant tant
Ch ↑ ↑ ↓ ↑ ↑ ↓ ↑ ↑ ↓
Ic ↑ ↑ ↓ ↑ ↑ ↓ ↓ ↓ ↓
Sl ↓ ↑ ↓ ↓ fluct ↓ ↓ ↑ ↑
uate

27
Now discuss the effect of all parameters on the decision variable-
When increase in scaling parameter a and b then for all three cases
preservation technology investment, selling price and total profit are
increasing.
When increase in parameter O (ordering cost) then for all three
cases preservation technology investment, selling price and total
profit are decreasing.
When increase in parameter θ (deterioration rate) then for all three
cases preservation technology investment is increasing, total profit
is decreasing while selling price is constant for case-1 and 3 but
increase in case 2.
When increase in parameter C h (holding cost) then preservation
technology investment and selling price both are increasing in all
three cases while total profit is decreasing for all cases.
When increase in parameter I c (interest charge) then preservation
technology investment and selling price both are increasing in all
three cases while total profit is decreasing for all cases.
When increase in parameter Sl (lost sale cost) then for all three
cases preservation technology investment is decreasing while total
profit is decreasing for cases 1 and 2 but increasing in case-3 and
selling price is increasing for case -1 and3 but fluctuating for case-
2.
Managerial insights-
This model is useful for industries dealing with perishable or time-
sensitive goods, such as food, pharmaceuticals, chemicals, and
fashion. Businesses in these sectors can benefit from preservation
investments to reduce spoilage, trade credit financing to improve
cash flow, and partial backordering to manage shortages efficiently.
E-commerce, retail supply chains, and logistics companies can also
use this model to optimize inventory control and reduce costs. By
integrating these strategies, companies can enhance profitability,

28
minimize waste, and ensure better customer satisfaction while
maintaining financial stability.
The results of this model recommend that managers strategically
invest in preservation technology to reduce deterioration rates and
extend product shelf life, ultimately minimizing waste and lowering
costs. They should also leverage trade credit financing to align
payment cycles with revenue, improving cash flow and financial
stability.
Additionally, managers are encouraged to adopt partial
backordering strategies to handle shortages efficiently while
maintaining customer satisfaction. By integrating these approaches,
businesses can optimize inventory levels, enhance profitability, and
achieve a balanced trade-off between holding costs, demand
fulfilment, and financial flexibility.

8. Conclusion
This study presents a comprehensive inventory model designed for
non-instantaneous deteriorating items, where demand depends on
both time and selling price. By integrating preservation technology
investment, trade credit financing, and partial backordering
strategies, the model provides a robust framework for optimizing
inventory management in industries dealing with perishable goods.
The key findings of this research highlight the significant benefits
of investing in preservation technology to reduce deterioration rates,
thereby extending the shelf life of products and minimizing waste.
Additionally, trade credit terms have been shown to improve cash
flow management and align payment cycles with revenue,
enhancing overall financial performance. Partial backordering
strategies offer a pragmatic approach to managing shortages,
maintaining customer satisfaction, and balancing inventory costs.
The numerical examples and sensitivity analyses demonstrate the
practical applicability of the model, offering valuable insights into
the interplay between preservation investments, trade credit terms,

29
and backordering policies. The results indicate that a strategic
combination of these factors can lead to substantial improvements
in inventory performance and profitability. While this study
provides a solid foundation for managing non-instantaneous
deteriorating inventories, several areas warrant further exploration
to enhance the model's applicability and robustness.
Advantages- The advantages of this model are written below-
 By incorporating preservation technology investment, the
model effectively reduces deterioration rates, leading to
extended shelf life and reduced waste.
 The inclusion of trade credit financing helps businesses
align payment cycles with revenue streams, enhancing
liquidity and financial stability.
 The integration of partial back ordering allows firms to
balance stock levels and manage shortages efficiently,
reducing overall holding and shortage costs.
 A strategic combination of preservation investment, trade
credit, and back ordering contributes to better inventory
performance and increased profitability.
Limitations- The limitations of this model are written below-
 The model assumes that demand depends only on time and
selling price, which may not fully capture complex
consumer behaviour and market fluctuations.
 The model does not explicitly address dynamic pricing
strategies, competitive influences, or changing economic
conditions.
 It primarily considers a single-product inventory system,
limiting its applicability to businesses managing multiple
perishable items.
 The model assumes deterministic lead times, which may not
reflect real-world uncertainties in supply chains.
 While preservation technology reduces deterioration, the
model does not explicitly account for environmental

30
 impacts, such as carbon footprint or waste disposal
strategies.
 Although theoretically sound, the integration of trade credit
terms, preservation investment, and partial back ordering
may require complex decision-making and higher initial
investment, which can be a challenge for small businesses.
Future research could consider the following directions: dynamic
Market Conditions, Multiple Products and Multi-Echelon Supply
Chains, Stochastic Demand and Lead Times, Sustainability and
Environmental Impact, Technological Advancements, and two or
more warehouses.
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