Abstract: For the selling of deteriorating items, such as fresh vegetables and fruits in supermarkets, it is usually observed that if large quantities are displayed it can attract more customers and generate more sale. Based on this observation, the inventory control problem is studied under the condition that payment delay is permissible. A mathematic model is developed for the minimization of cost per year. This model describes the relation between inventory level and demand rate better than the existing models. With this model, the optimal replenishment cycle time and order quantity under various circumstances can be found. Numerical examples are given to demonstrate the application of the proposed method. By sensitivity analysis, it shows how the variation of the fresh time, the deteriorating rate, and the credit period impact the optimal ordering policy.

Key words: permissible payment delay, stock-dependent demand, non-instantaneous deteriorating items, inventory