Future Supply Uncertainty Model for Deteriorating Items Under Permissible Delay in Payment for two Suppliers

Abstract

Abtsrcat

This paper develops a model to determine an optimal ordering policy for deteriorating items under permissible delay of payment and allowable shortage for future supply uncertainty by suppliers. Spectral theory is used to derive explicit expression for the transition probabilities of a four state continuous time markov chain representing the state of the system. These probabilities are used to compute the average cost. Optimal solution is obtained using Newton Raphson method in R programming.