Integrated Inventory System with the Effect of Inflation and Credit Period

The integrated inventory models usually have the advantage of reducing total cost. However, the way to allocate the cost savings from the integration to the buyer and vendor is critical to the success of the joint relationship between both sides. To deal with this problem, this paper develops the integrated models with the supplier's trade offer of credit. The demand rate is assumed to be a function of inflation. In real situation, retailers keeping in mind supplier's trade offer with cost-minimization strategy. Shortages are also taken into account. Optimal solution for proposed model is derived.