Optimal credit period and ordering policy with credit-dependent demand under two-level trade credit

2021 ◽  
pp. 108311
Author(s):  
Gongbing Bi ◽  
Pingfan Wang ◽  
Dujuan Wang ◽  
Yunqiang Yin
Keyword(s):  
Trade Credit ◽  
Credit Period ◽  
Ordering Policy ◽  
Dependent Demand

scholarly journals Optimal pricing and lot-sizing decisions under Weibull distribution deterioration and trade credit policy

2008 ◽  
Vol 18 (2) ◽  
pp. 221-234
Author(s):  
S.K. Manna ◽  
K.S. Chaudhuri ◽  
C. Chiang
Keyword(s):  
Weibull Distribution ◽  
Trade Credit ◽  
Lot Sizing ◽  
Retail Price ◽  
Lot Size ◽  
Credit Period ◽  
Two Parameter ◽  
Weibull Distribution Deterioration ◽  
Dependent Demand

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.

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

2020 ◽  
Vol 54 (6) ◽  
pp. 1685-1701 ◽  
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.

Retailer’s Ordering Policy in a Supply Chain when Demand is Price and Credit Period Dependent

2011 ◽  
Vol 2 (4) ◽  
pp. 61-74 ◽  
Author(s):  
Chandra K. Jaggi ◽  
Amrina Kausar
Keyword(s):  
Sensitivity Analysis ◽  
Trade Credit ◽  
Credit Policy ◽  
Great Role ◽  
Credit Period ◽  
Numerical Examples ◽  
On Demand ◽  
Partial Trade Credit ◽  
Full Credit ◽  
Ordering Policy

Trade credit is a well established promotional tool in the present competitive world and its impact on demand cannot be ignored. Businesses often use trade credit to increase their market share and, in turn, the profit. Undoubtedly, trade credit plays a great role in increasing the demand but it also involves a great risk of non-payment. In order to reduce the risk of non-payment, businessman at times use a partial trade credit policy in which they demand a certain percentage of the total amount from the customer at the time of purchase and offers the credit for the remaining amount. Furthermore, it is also observed that the demand of FMCG is highly price sensitive. In order to see the effect of credit and price together, on demand, the retailer’s demand is taken as a function of price and credit period. Moreover it is assumed that the supplier offers the full credit to the retailer but the retailer passes a partial credit to customers. The inventory model, determines the optimal replenishment time, credit period, and price for the retailer that maximizes profit. Numerical examples have been provided to support the model followed by the comprehensive sensitivity analysis.

scholarly journals Optimal Replenishment for Perishable Products with Inventory-Dependent Demand and Backlogging under Continuous and Discrete Progressive Payments

2018 ◽  
Vol 10 (10) ◽  
pp. 3723 ◽  
Author(s):  
Longfei He ◽  
Han Gao ◽  
Xiao Zhang ◽  
Qinpeng Wang ◽  
Chenglin Hu
Keyword(s):  
Trade Credit ◽  
Cash Flows ◽  
Future Research ◽  
Time Intervals ◽  
Ordering Policy ◽  
Replenishment Policy ◽  
Convexity Assumptions ◽  
Short Time ◽  
The Impact ◽  
Dependent Demand

Managing material and cash flows attracts concerns of physical and financial departments in most companies. We, therefore, focus on optimizing the replenishment policy for a channel with stock-dependent demand considering item deterioration and order backlogging under two financial schemes of progressive trade credit periods. We take both the continuous payment regime (CPR) and discrete payment regime (DPR) into account in the progressive trading process, which generates ten distinct scenarios. We show that the profit functions may not necessarily be concave and accordingly give a corresponding computing algorithm, which relaxes the convexity assumptions of objective functions in the existing literature and consequently enrich the research. We address the formulation characterization and the logic of pursuing global optimization from models arising in all settings. Computational studies and simulations are conducted to illustrate the effect of various parameters on the optimal replenishing policy and profit. Numerical experiments show that the CPR scheme is dominantly prior to DPR for long replenishment time intervals, whereas it is exactly the opposite for short time intervals. We also examine the impact of the shortage cost and deteriorating rate on optimum ordering policy and channel performance. Finally, future research directions are addressed in the end.

scholarly journals Optimal pricing, ordering, and credit period policies for deteriorating products under order-linked trade credit

2021 ◽  
Vol 0 (0) ◽  
pp. 0
Author(s):  
Yu-Chung Tsao ◽  
Hanifa-Astofa Fauziah ◽  
Thuy-Linh Vu ◽  
Nur-Aini Masrurohand
Keyword(s):  
Default Risk ◽  
Global Economy ◽  
Trade Credit ◽  
Solution Procedure ◽  
Selling Price ◽  
Discounted Cash Flow ◽  
Credit Period ◽  
Total Profit ◽  
Credit Financing ◽  
Dependent Demand

<p style='text-indent:20px;'>In the modern global economy, trade credit financing is typical in business transactions for both sellers and buyers. The seller offers a credit period to attract new buyers or stimulate demand, and the buyer takes the opportunity to accumulate revenue. To obtain this benefit, the seller prefers trade credit policies that are dependent on the quantity ordered, referred to as order-linked trade credit. The buyer can obtain the benefits from a fully delayed payment if their order is sufficiently large. Similarly, the seller can sell many products while granting a credit period. Otherwise, the buyer receives only partial trade credit, and the seller can take the opportunity of both cash and credit payments. In this study, an economic order quantity (EOQ) inventory model for deteriorating products, under default risk control-based trade credit, is formulated using a discounted cash flow approach. The seller offers to the buyer order-linked trade credit with price-and credit-period-dependent demand. The optimal selling price, credit period policies, and replenishment cycle time are determined simultaneously, while maximizing the present value of the seller's total profit. Moreover, this research provides numerical examples and sensitivity analysis to illustrate the theoretical results, solution procedure, and gain managerial insights. <b>200</b> words.</p>

Vendor-Buyer Supply Chain Models With Supplier Default Risk Under Selling Price and Trade Credit Period Dependent Demand

2018 ◽  
pp. 156-173
Author(s):  
Chetansinh R. Vaghela ◽  
Nita H. Shah
Keyword(s):  
Supply Chain ◽  
Default Risk ◽  
Trade Credit ◽  
Stackelberg Game ◽  
Model Parameters ◽  
Selling Price ◽  
Lot Size ◽  
Credit Period ◽  
Proposed Model ◽  
Dependent Demand

This chapter focuses on uncooperative supply chain inventory models when a supplier offers a credit period to the retailer for a fixed period of time. The models are studied with trade credit in Nash game and Supplier-Stackelberg game respectively. First, the authors have presented optimal results for centralized and decentralized decisions with selling price dependent demand and without trade credit. Second, the authors have obtained optimal results under the two games using classical optimization. The total joint profit of the supply chain is maximized with respect to initial lot size, selling price, and trade credit period. Numerical examples are provided to authenticate the proposed model and to provide some managerial insights. Also through sensitivity analysis, important model parameters are examined.

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