Supplier-retailer-customer trade credit policy for perishables

Perishable items have a relatively short shelf life and degrade naturally. In particular, managing perishable inventory can be challenging, since shortages and wastage are closely associated. Preservation techniques are incorporated to maintain the shelf life of perishable items. The objective of this paper is to optimise the total inventory costs by minimising the deterioration rate and free up working capital for entrepreneurs. Genetic algorithm with one-point crossover, swap mutation and random selection is used to determine the optimal credit period and cycle time by varying different upstream credit periods. An economic order quantity is derived to determine an optimal ordering quantity for a trade credit inventory model. The total profit corresponding to various credit periods and time intervals is illustrated numerically. The effect of changes in key parameters of the optimal solution is investigated using sensitivity analysis. The model is applicable for perishable items like fruits, vegetables, meat, dairy products, and so on which need preservation to increase shelf life.