Retailer’s replenishment and credit policies for deteriorating inventory under credit period-dependent demand and bad-debt loss

In this paper, we consider the problem of simultaneous determination of retail price and lot-size (RPLS) under the assumption that the supplier offers a fixed credit period to the retailer. It is assumed that the item in stock deteriorates over time at a rate that follows a two-parameter Weibull distribution and that the price-dependent demand is represented by a constant-price-elasticity function of retail price. The RPLS decision model is developed and solved analytically. Results are illustrated with the help of a base example. Computational results show that the supplier earns more profits when the credit period is greater than the replenishment cycle length. Sensitivity analysis of the solution to changes in the value of input parameters of the base example is also discussed.

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Optimal replenishment decision for retailers with variable demand for deteriorating products under a trade-credit policy

RAIRO - Operations Research ◽

10.1051/ro/2019100 ◽

2020 ◽

Vol 54 (6) ◽

pp. 1685-1701 ◽

Cited By ~ 6

Author(s):

Biswajit Sarkar ◽

Bikash Koli Dey ◽

Mitali Sarkar ◽

Sun Hur ◽

Buddhadev Mandal ◽

...

Keyword(s):

Trade Credit ◽

Numerical Study ◽

Global Optimum ◽

Optimal Decision ◽

Selling Price ◽

Credit Policy ◽

Credit Period ◽

Deterioration Rate ◽

Solution Methodology ◽

Dependent Demand

In this study one obtained the optimal decision of a retailer for the replenishment rate with selling-price and credit-period dependent demand to maximize the profit. A time-varying deterioration rate was considered for those products. A credit-period was offered by the retailer to the end customer to settle the whole payments. The aim of the model was to obtain the maximum profit for the retailer based model. A solution methodology with an algorithm was used to obtain the global optimum profit. An illustrative numerical example was given to test the practical applicability of the model. Numerical study indicated that the profit was at a maximum when the permissible delay-period for payment offered by the suppliers was lies between the permissible delay-time, and the cycle time, offered by the retailer.

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Joint Decision for Price Competitive Inventory Model with Time-Price and Credit Period Dependent Demand

Advances in Business Information Systems and Analytics - Handbook of Research on Advanced Data Mining Techniques and Applications for Business Intelligence ◽

10.4018/978-1-5225-2031-3.ch020 ◽

2017 ◽

pp. 341-352

Author(s):

Nita H. Shah

Keyword(s):

Supply Chain ◽

Wholesale Price ◽

Retail Price ◽

The Other ◽

Market Demand ◽

Joint Decision ◽

Credit Period ◽

Time Price ◽

Delay In Payments ◽

Dependent Demand

The problem analyzes a supply chain comprised of two front-runner retailers and one supplier. The retailers' offer customers delay in payments to settle the accounts against the purchases which is received by the supplier. The market demand of the retailer depends on time, retail price and a credit period offered to the customers with that of the other retailer. The supplier gives items with same wholesale price and credit period to the retailers. The joint and independent decisions are analyzed and validated numerically.

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