scholarly journals Pricing Policy in an Integrated Two-echelon Supply Chain under Permissible Delay of Payment

2021 ◽  
Vol 9 (6) ◽  
pp. 1-4
Author(s):  
Subhankar Adhikari
Keyword(s):  
Supply Chain ◽  
Cycle Length ◽  
Trade Credit ◽  
Integrated System ◽  
Pricing Strategy ◽  
Collaborative Approach ◽  
Pricing Policy ◽  
Credit Period ◽  
Maximum Profit ◽  
Ultimate Objective

This work examines the effect of pricing strategy in a supply chain consists of two members namely supplier and retailer. The supplier provides a credit period to the retailer. The retailer also provides a trade credit period to the customer within cycle length. A collaborative approach between two members is considered. The ultimate objective is to find maximum profit for the integrated system.

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.

scholarly journals Strategic Provision of Trade Credit in a Dual-Channel Supply Chain

2021 ◽  
Vol 2021 ◽  
pp. 1-14
Author(s):  
Qin Wan ◽  
Yu Huang ◽  
Cuiting Yu ◽  
Meili Lu
Keyword(s):  
Supply Chain ◽  
Interest Rate ◽  
Price Competition ◽  
Trade Credit ◽  
Pricing Strategy ◽  
Dual Channel ◽  
Brick And Mortar ◽  
Online Channel ◽  
Dual Channel Supply Chain ◽  
Competitive Pricing

This study focuses on a a dual-channel supply chain that consists of a capital-constrained brick-and-mortar retailer and a manufacturer, where a manufacturer can simultaneously sell products through a traditional retail channel and a direct online channel. Supplementary pricing strategy and competitive pricing strategy are simulated in our model, and we find that the former one is the better choice for the manufacturer when the retailer suffers capital constraints. In our analysis, the capital constraint on retailer could mitigate the price competition between two channels, and it may be beneficial to the manufacturer under certain conditions. Our findings show that the manufacturer should strategically provide trade credit to retailers rather than unconditionally provide it. We present two trade-credit strategies (trade credit with positive interest rate and trade credit with zero interest rate) and suggest that the manufacturer should choose an appropriate trade-credit strategy according to the initial capital of the retailer. To guide the manufacturer when and how to provide trade credit, we conduct several numerical simulations based on our results and further plot out a graph to direct the manufacturer to an appropriate strategy of trade credit.

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.

scholarly journals Supply Chain Model with Stochastic Lead Time, Trade-Credit Financing, and Transportation Discounts

2017 ◽  
Vol 2017 ◽  
pp. 1-14 ◽  
Author(s):  
Sung Jun Kim ◽  
Biswajit Sarkar
Keyword(s):  
Supply Chain ◽  
Lead Time ◽  
Trade Credit ◽  
Coordination Mechanism ◽  
Chain Model ◽  
Credit Policy ◽  
Setup Cost ◽  
Credit Period ◽  
Supply Chain Model ◽  
Credit Financing

This model extends a two-echelon supply chain model by considering the trade-credit policy, transportations discount to make a coordination mechanism between transportation discounts, trade-credit financing, number of shipments, quality improvement of products, and reduced setup cost in such a way that the total cost of the whole system can be reduced, where the supplier offers trade-credit-period to the buyer. For buyer, the backorder rate is considered as variable. There are two investments to reduce setup cost and to improve quality of products. The model assumes lead time-dependent backorder rate, where the lead time is stochastic in nature. By using the trade-credit policy, the model gives how the credit-period would be determined to achieve the win-win outcome. An iterative algorithm is designed to obtain the global optimum results. Numerical example and sensitivity analysis are given to illustrate the model.

scholarly journals Production/Inventory Policies for a Two-Echelon System with Credit Period Incentives

Mathematics ◽  
2021 ◽  
Vol 9 (15) ◽  
pp. 1725
Author(s):  
Beatriz Abdul-Jalbar ◽  
Roberto Dorta-Guerra ◽  
José M. Gutiérrez ◽  
Joaquín Sicilia
Keyword(s):  
Supply Chain ◽  
Small Businesses ◽  
Trade Credit ◽  
Credit Period ◽  
Purchasing Cost ◽  
Deterministic Demand ◽  
Single Vendor ◽  
Production Inventory ◽  
Integrated Policy ◽  
Credit Financing

Trade credit is a crucial source of capital particularly for small businesses with limited financing opportunities. Inventory models considering trade credit financing have been widely studied. However, while there is extensive research on the single-vendor single-buyer inventory model allowing delays in payments, the systems where the vendor supplies to more than one buyer have received less attention. In this paper, we analyze a two-echelon inventory system where a single vendor supplies an item to two buyers who face a constant deterministic demand. The vendor produces the items at a finite rate and offers the buyers a delay payment period. That is, the buyers can delay the payment for the purchased items until the end of the credit period. Therefore, during such a period, the buyers sell the items and use the sales revenue to earn interest. At the end of the credit period, the buyers should pay the purchasing cost to the vendor for which external funding may be necessary. It is widely accepted that, in general, centralized policies reduce the total cost of the supply chain. Therefore, we first deal with an integrated model assuming that the vendor and the buyers make decisions jointly. However, in some cases, the buyers are not willing to collaborate, and the management of the supply chain has to be carried out in a decentralized manner. Hence, we also address the problem under a non-cooperative setting. Numerical examples are presented to illustrate both models. Additionally, we perform a computational experiment to compare both strategies, and a sensitivity analysis of the parameters is also carried out. From the results, we derived that, in general, it was more profitable to follow the integrated policy excepting when the replenishment costs for the buyers were high. Finally, in order to validate the computational results, a statistical analysis is performed.

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

2012 ◽  
pp. 262-277
Author(s):  
Chandra K. Jaggi ◽  
Amrina Kausar
Keyword(s):  
Sensitivity Analysis ◽  
Supply Chain ◽  
Great Risk ◽  
Trade Credit ◽  
Inventory Model ◽  
Partial Credit ◽  
Credit Period ◽  
Numerical Examples ◽  
On Demand ◽  
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 Mathematical Modeling of a Supply Chain with Imperfect Transport and Two-Echelon Trade Credits

2013 ◽  
Vol 2013 ◽  
pp. 1-7
Author(s):  
A. Thangam
Keyword(s):  
Mathematical Modeling ◽  
Mathematical Model ◽  
Supply Chain ◽  
Trade Credit ◽  
Delay Period ◽  
Credit Period ◽  
Numerical Examples ◽  
Proposed Model ◽  
Replenishment Policy ◽  
Trade Credits

Although a smoothly running supply chain is ideal, the reality is to deal with imperfectness in transportations. This paper tries to propose a mathematical model for a supply chain under the effect of unexpected disruptions in transport. Supplier offers the retailer a trade credit period and the retailer in turn offers his customers a permissible delay period. The retailer offers his customers a credit period and he receives the revenue from to , where is the cycle time at the retailer. Under this situation, the three cases such as , , and are discussed. An EPQ-based model is established and retailer's optimal replenishment policy is obtained through mathematical theorems. Finally, numerical examples and sensitivity analysis are presented to felicitate the proposed model.

scholarly journals Trade Credit and Revenue Sharing of Supply Chain with a Risk-Averse Retailer

2021 ◽  
Vol 2021 ◽  
pp. 1-15
Author(s):  
Caiyun Liu ◽  
Kebing Chen ◽  
Mingxia Li ◽  
Haijie Zhou
Keyword(s):  
Supply Chain ◽  
Risk Aversion ◽  
Value At Risk ◽  
Trade Credit ◽  
Revenue Sharing ◽  
Conditional Value At Risk ◽  
Optimal Decision ◽  
Risk Averse ◽  
Credit Period ◽  
Optimal Decisions

In this paper, we develop three supply chain game models, i.e., the basic model, the single trade credit model, and the trade credit and revenue sharing collaboration model. Conditional value-at-risk (CVaR) criterion is used as the measure of risk assessment in these models. We analyze the optimal decisions in the centralized and decentralized situations, respectively, and verify that single trade credit cannot coordinate the supply chain. However, the collaboration contract can coordinate the supply chain. Furthermore, this paper explores the influence of risk-aversion factor, trade credit period, revenue sharing coefficient, and other parameters on the optimal decisions and studies the feasible range of Pareto improvement in the collaborative model. In numerical experiments, the results show that the decisions and profits of both the manufacturer and the retailer reply on the degree of the risk aversion, the trade credit period, and the revenue sharing coefficient. The collaborative contract effectively improves supply chain performance and achieves a ‘win-win’ situation for the supply chain members. In addition, we also consider two extensions for our research. One extension shows that the collaborative contract of trade credit and buyback can also coordinate the supply chain in a certain range. The other extension considers the optimal decision of a risk-averse manufacturer with CVaR.

Retailer’s Operational Decision Based on EOQ Model with Upstream Flexible Two-Part Trade Credit and Downstream Partial Trade Credit

2021 ◽  
pp. 2150006
Author(s):  
Yi Zhang ◽  
Jinwu Gao
Keyword(s):  
Supply Chain ◽  
Inventory Management ◽  
Trade Credit ◽  
Optimization Method ◽  
Credit Period ◽  
Eoq Model ◽  
Partial Trade Credit ◽  
Purchase Cost ◽  
Cash Discount ◽  
Optimal Ordering

Flexible two-part trade credit is widely used in supply chain, however, there is scant research about inventory management engaged in flexible two-part trade credit strategy. This paper bridges this gap and studies a new two-level trade credit based on an EOQ model in which the supplier provides flexible two-part trade credit to the retailer and the retailer provides partial trade credit to its customer. We adopt a convex optimization method to obtain retailer’s optimal operational decision (i.e., the optimal ordering cycle, the optimal fraction of purchase cost that paid in advance, and the optimal credit period for its downstream customer). Moreover, we design a numerical algorithm to solve this model computationally. We find that: (1) the retailer is not sensitive to small cash discount provided by the supplier; (2) the length of credit period in flexible two-part trade credit strategy will affect the customer and retailer: the shorter one influences the retailer’s behavior, but not the customer’s; the longer one influences the customer’s behavior, but not the retailer’s; (3) the retailer can control its risk through partial trade credit.

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