scholarly journals An EOQ model for deteriorating items analyzing retailer’s optimal strategy under trade credit and return policy with nonlinear demand and resalable returns

2022 ◽  
Vol 12 (1) ◽  
pp. 47-55
Author(s):  
Mamta Kumari ◽  
Pijus Kanti De
Keyword(s):  
Trade Credit ◽  
Inventory Model ◽  
Optimal Order ◽  
Selling Price ◽  
Return Policy ◽  
Eoq Model ◽  
Proposed Model ◽  
Total Profit ◽  
Replenishment Cycle ◽  
Full Trade Credit

This paper presents an EOQ model where demand is dependent upon time and selling price. In the proposed model of inventory, the retailer allows its unsatisfied customers to return their product whereas the manufacturer offers a full trade credit policy to the retailer. To make our model realistic, we have assumed that the product returned can be resold with the same selling price. Number of returns is a function of demand. In this proposed inventory model considering deterioration, the retailer does not fully reimburse its customers for the returned product. The primary purpose of this inventory model is to determine the optimal selling price, optimal order quantity, and optimal replenishment cycle length in order to maximize the retailer’s total profit earned per unit time. A numerical example is also presented and a sensitivity analysis is carried to highlight the findings of the suggested inventory model.

scholarly journals Inventory Modeling for Deteriorating Imperfect Quality Items with Selling Price Dependent Demand and Shortage Backordering under Credit Financing

2017 ◽  
Vol 2 (2) ◽  
pp. 110-124 ◽  
Author(s):  
Aditi Khanna ◽  
Prerna Gautam ◽  
Chandra K. Chandra K.
Keyword(s):  
Trade Credit ◽  
Optimal Order ◽  
Manufacturing Processes ◽  
Selling Price ◽  
Imperfect Quality ◽  
Inspection Process ◽  
Total Profit ◽  
Credit Financing ◽  
Fierce Competition ◽  
Dependent Demand

The production processes throughout the world aim at improving quality by introducing latest technologies so as to perform well in fierce competition. Despite this due to various unavoidable factors, most of the manufacturing processes end up with certain imperfections. Hence, all the items produced are not of perfect quality. The condition tends to be more susceptible while dealing with items of deteriorating quality; therefore an inspection process is must for screening good quality items from the ordered lot. Demand is assumed to be price dependent and it is represented by a constant price elasticity function. Also to endure with the rapid growth and turbulent markets, the suppliers try to engage and attract retailers through various gimmicks and one such contrivance is offering trade credit, which is proved to be an influential strategy for attracting new customers. In view of this, the present paper develops an inventory model for items of imperfect quality with deterioration under trade-credit policies with price dependent demand. Shortages are allowed and fully backlogged. A mathematical model is developed to depict this scenario. The aim of the study is to optimize the optimal order level, backorder level and selling price so as to maximize the retailer’s total profit. Findings are validated quantitatively by using numerical analysis. Sensitivity analysis is also performed so as to cater some important decision-making insights.

Inventory management with online payment and preorder discounts

2020 ◽  
Vol 120 (11) ◽  
pp. 2001-2023
Author(s):  
Md. Rakibul Hasan ◽  
Yosef Daryanto ◽  
Tutul Chandra Roy ◽  
Yi Feng
Keyword(s):  
Inventory Management ◽  
Selling Price ◽  
Content Type ◽  
Innovative Strategies ◽  
Online Payment ◽  
Proposed Model ◽  
Total Profit ◽  
Replenishment Cycle ◽  
Optimum Price ◽  
Inventory Decision

PurposeThe advancement of technology opens many opportunities for retailing businesses to increase their profit through innovative strategies, such as discount offers, preorder programs and online payment services. The purpose of this study is to investigate decision-making methods for retailers who sell deteriorating products that utilize an e-commerce platform and offering preorder.Design/methodology/approachThe authors study the optimum price and replenishment cycle when multiple discounts policy is implemented for customers when they purchase during the preorder period and make the payment via an online system. The proposed economic order quantity model works for noninstantaneous deteriorating items that will maximize the total profit. Moreover, it considers the effect of selling price and advertisement on customer demand. The concavity of the profit function is proved. Then, a comparison is carried out between the traditional payment system and online payment. Finally, two numerical examples and the sensitivity analysis are performed.FindingsThe results show the benefit of the system with online payment compared to the traditional one. Further analysis shows that the total profit increases when the frequency of advertisement, interest from the banking company, location perimeter and the nondeterioration time increase.Originality/valueThe proposed model guides e-commerce retailers optimizing the price and inventory decision when they offer a discount, preorder program and online payment service. No researcher has undergone a study with this complexity.

scholarly journals An EPQ Inventory Model with Allowable Shortages for Deteriorating Items under Trade Credit Policy

2014 ◽  
Vol 2014 ◽  
pp. 1-10 ◽  
Author(s):  
Zohreh Molamohamadi ◽  
Rahman Arshizadeh ◽  
Napsiah Ismail
Keyword(s):  
Trade Credit ◽  
Search Algorithm ◽  
Cuckoo Search ◽  
Cuckoo Search Algorithm ◽  
Inventory Model ◽  
Model Parameters ◽  
Selling Price ◽  
Proposed Model ◽  
Net Profit ◽  
Replenishment Policy

This paper attempts to obtain the replenishment policy of a manufacturer under EPQ inventory model with backorder. It is assumed here that the manufacturer delays paying for the received goods from the supplier and the items start deteriorating as soon as they are being produced. Based on these assumptions, the manufacturer’s inventory model is formulated, and cuckoo search algorithm is applied then to find the replenishment time, order quantity, and selling price with the objective of maximizing the manufacturer’s total net profit. Besides, the traditional inventory system is shown as a special case of the proposed model in this paper, and numerical examples are given to demonstrate better performance of trade credit. These examples are also used to compare the results of cuckoo search algorithm with genetic algorithm and investigate the effects of the model parameters on its variables and net profit.

scholarly journals Inventory Model with Inflation under Credit Period and Shortage

2020 ◽  
Vol 9 (5) ◽  
pp. 1050-1055
Keyword(s):  
Sensitivity Analysis ◽  
Inventory Model ◽  
Optimal Order ◽  
Selling Price ◽  
Credit Period ◽  
Numerical Examples ◽  
Price Function ◽  
Total Profit ◽  
Time Gap ◽  
Delay In Payments

In this study, an deterministic inventory model based on the concept of permissible delay in payments is discussed. Demand is assumed to be price dependent, and a constant price function represents it. Shortages are allowed and partially backlogged. In the realistic environment, it observed that there are several items like dry fruits, vegetables, grocery, and fruits, etc. which deteriorate after a time gap. So this model is also based on non-instantaneous deterioration. This study aims is to optimize the optimal order level and selling price to maximize the retailer`s total profit. Finally, numerical examples solved by using a proposed algorithm to show the validity of the model and sensitivity analysis done on parameters

An inventory model of a three parameter Weibull distributed deteriorating item with variable demand dependent on price and frequency of advertisement under trade credit

2019 ◽  
Vol 53 (3) ◽  
pp. 903-916 ◽  
Author(s):  
Ali Akbar Shaikh ◽  
Leopoldo Eduardo Cárdenas–Barrón ◽  
Asoke Kumar Bhunia ◽  
Sunil Tiwari
Keyword(s):  
Trade Credit ◽  
Inventory Model ◽  
Selling Price ◽  
Credit Policy ◽  
Variable Demand ◽  
Reduced Gradient Method ◽  
Deterioration Rate ◽  
Rate Dependent ◽  
Reduced Gradient ◽  
Generalized Reduced Gradient

This paper develops an inventory model for a deteriorating item with variable demand dependent on the selling price and frequency of advertisement of the item under the financial trade credit policy. Shortages are allowed and these are partially backlogged with a variable rate dependent on the duration of waiting time until to the arrival of next order. In this inventory model, the deterioration rate follows a three-parameter Weibull distribution. The corresponding inventory model is formulated and solved by using the well-known generalized reduced gradient method along with an algorithm. To validate the inventory model, two numerical examples are considered and solved. Finally, based on one numerical example, the impacts of different parameters are studied by a sensitivity analysis considering one parameter at a time and leaving the other parameters fixed.

scholarly journals Two-Level Credit Financing for Noninstantaneous Deterioration Items in a Supply Chain with Downstream Credit-Linked Demand

2013 ◽  
Vol 2013 ◽  
pp. 1-22 ◽  
Author(s):  
Yong He ◽  
Hongfu Huang
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Financing Policy ◽  
Sensitive Analysis ◽  
Eoq Model ◽  
Replenishment Cycle ◽  
Credit Financing ◽  
Delay In Payments ◽  
Optimal Ordering ◽  
Total Average

Trade credit financing is a useful tool in business today, which can be characterized as the agreement between supply chain members such as permissible delay in payments. In this study, we assume that the items have the property of noninstantaneous deterioration and the demand is a function of downstream credit. Then, an EOQ model for noninstantaneous deterioration is built based on the two-level financing policy. The purpose of this paper is to maximize the total average profit by determine the optimal downstream credit period, the optimal replenishment cycle length, and the optimal ordering quantity per cycle. Useful theorems are proposed to characterize the method of obtaining the optimal solutions. Based on the theorems, an algorithm is designed, and numerical tests and sensitive analysis are provided. Lastly, according to the sensitive analysis, managerial insights are proposed.

scholarly journals Retailer’s Joint Ordering, Pricing, and Preservation Technology Investment Policies for a Deteriorating Item under Permissible Delay in Payments

2018 ◽  
Vol 2018 ◽  
pp. 1-14 ◽  
Author(s):  
Umakanta Mishra ◽  
Jacobo Tijerina-Aguilera ◽  
Sunil Tiwari ◽  
Leopoldo Eduardo Cárdenas-Barrón
Keyword(s):  
Trade Credit ◽  
Optimal Solution ◽  
Inventory Model ◽  
Selling Price ◽  
Permissible Delay In Payments ◽  
Investment Policies ◽  
Technology Investment ◽  
Preservation Technology ◽  
Preservation Technology Investment ◽  
Delay In Payments

This article develops an inventory model for deteriorating items with controllable deterioration rate (by using preservation technology) under trade credit policy. As in practical scenarios the demand of an item is directly associated with its selling price, keeping this in mind, it is assumed to be a price dependent demand. The main objective of the inventory model is to determine jointly the optimal ordering, pricing, and preservation technology investment policies for retailer so that the total profit is maximized. The effects of key parameters on optimal solution are studied through a sensitivity analysis with the aim of examining the behavior of the inventory model with controllable deterioration under the permissible delay in payments.

scholarly journals Ordering Policies of a Deteriorating Item in an EOQ Model under Upstream Partial Order-Quantity-Dependent Trade Credit and Downstream Full Trade Credit

2021 ◽  
Vol 2021 ◽  
pp. 1-13
Author(s):  
Zohreh Molamohamadi ◽  
Abolfazl Mirzazadeh
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Inventory Systems ◽  
Order Quantity ◽  
Credit Period ◽  
Eoq Model ◽  
Partial Trade Credit ◽  
Replenishment Policy ◽  
Full Trade Credit ◽  
Credit Contract

In the classical inventory systems, the retailer had to settle the accounts of the purchased items at the time they were received. But in practice, the supplier applies some strategic tools, such as trade credit contract, to enhance his sales channel and offers delay period to his customers to settle the account. Any member of the supply chain may offer full or partial trade credit contract to his downstream level. Full trade credit is the case that the latter is allowed to defer the whole payment to the end of the credit period. In partial trade credit, however, the downstream supply chain member must pay for a proportion of the purchased goods at first and can delay paying for the rest until the end of the credit period. This paper considers a two-level trade credit, where the supplier offers order-quantity-dependent partial trade credit to a retailer, who suggests full trade credit to his customers. An economic order quantity (EOQ) inventory model of a deteriorating item is formulated here, and the Branch and Reduce Optimization Navigator is applied to find the optimal replenishment policy. The sensitivity of the variables on different parameters has been analyzed by applying some numerical examples. The data reveal that increasing the credit periods of the retailer and the customers can decrease and increase the retailer’s total cost, respectively.

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