Optimal Deterioration Control in Perishable Inventory Systems with Trade Credit and Demand Dependent on Time, Price, Advertisement, and Quality

This study presents a Deterioration Control Decision Support System (DCDSS) tailored for retailers dealing with branded organic fruits or vegetables, where product perishability significantly impacts profitability. The model considers a trade credit environment in which the supplier allows a delayed payment period, and shortages are permitted with partial backlogging. Demand is modelled as a function of time, selling price, advertisement effort, and the product's deterioration rate capturing real-world dynamics of consumer behavior for highly perishable, quality-sensitive goods. The proposed system integrates the effects of freshness preservation technology, where the deterioration rate is controllable through investments that influence holding costs. A quality indicator is employed to quantify the impact of preservation on deterioration, linking technical effort with marginal cost. The decision model aims to minimize total inventory cost while optimizing the deterioration rate and managing trade-offs among marketing efforts, pricing strategies, and credit policies. Numerical experiments demonstrate the sensitivity of optimal solutions to key parameters, offering actionable insights for retailers seeking to maximize profit and maintain product quality in competitive perishable goods markets.