A particle swarm optimization for solving lot‐sizing problem with fluctuating demand and preservation technology cost under trade credit

In this paper, we consider the effect of preservation technology cost investing on preservation equipment for reducing deterioration rate under two‐level trade credit. The preservation technology cost is allowed for periodical upward or downward adjustments due to the time varying demand and the strategy of trade credit within the planning horizon. We establish a deterministic economic order quantity model for a retailer to determine his/her optimal preservation technology cost per replenishment cycle, the trade credit policies, the replenishment number and replenishment schedule that will maximize the present value of total profit. A particle swarm optimization with constriction factor is coded and used to solve the mixed‐integer nonlinear programming problem by employing the properties derived from this paper. Some numerical examples are used to illustrate the features of the proposed model.