Trade credit financing has become a powerful tool to improve sales & profit
in an industry. In general, a supplier/retailer frequently offers trade
credit to its credit risk downstream member in order to stimulate their
respective sales. This trade credit may either be full or partial depending
upon the past profile of the downstream member. Partial trade credit may be
offered by the supplier/retailer to their credit risk downstream member who
must pay a portion of the purchase amount at the time of placing an order and
then receives a permissible delay on the rest of the outstanding amount to
avoid non-payment risks. The present study investigates the retailer?s
inventory problem under partial trade credit financing for two echelon supply
chain where the supplier, as well as the retailer, offers partial trade
credit to the subsequent downstream member. An algebraic approach has been
applied for finding the retailer?s optimal ordering policy under minimizing
the annual total relevant cost. Results have been validated with the help of
examples followed by comprehensive sensitivity analysis.
Retailer’s Optimal Ordering Policies under Partial Trade Credit
