In this paper, an inventory model for deteriorating items with selling price and credit period sensitive demand is developed. The inventory system deals with products which have a fixed expiry date after which the product cannot be sold. Here, a permissible delay period is allowed by the supplier to the retailer to pay all his dues, but if the retailer doesn’t pay the entire amount at the end of the delay period, an interest will be charged on the remaining dues. The shortages are also allowed and partially backlogged. This paper provides a procedure to develop the total retailer’s profit function per unit time of the system and optimal ordering quantity per cycle for the retailer. Finally, the model is illustrated with numerical examples.