Probabilistic time-scheduling model for an exponentially decaying inventory when delays in payments are permissible

A probabilistic time-scheduling model is developed for an exponentially decaying inventory when the supplier offers some credit period T* for settling the accounts for the purchase quantity. The credit period T* is known constant. Mathematical models are derived for both the cases (i) T*•T and (ii) T*>T. Expressions are derived for the total average expected cost of the system, the optimum cycle time and the time for obtaining optimum order levels, S=S0, under each case. The model is illustrated in two particular forms.