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.

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>

Non-Cooperative Game Theoretic Approach in Supply Chain With Imperfect Quality Items and Credit Financing

2018 ◽  
pp. 215-232
Author(s):  
Rita Yadav ◽  
Sarla Pareek ◽  
Mandeep Mittal
Keyword(s):  
Supply Chain ◽  
Stackelberg Game ◽  
Decision Variable ◽  
Chain Model ◽  
Selling Price ◽  
Theoretic Approach ◽  
Credit Period ◽  
Imperfect Quality ◽  
Inspection Process ◽  
Credit Financing

This paper considers a supply chain model for imperfect quality items in which retail price of the buyer influences the demand of the product. The seller offers fix credit period for the buyer to stimulate his sales. Each delivered lot, goes through an inspection process at the buyer's end. After the inspection, items are separated into two parts, one is perfect quality items and another is imperfect quality items. The perfect quality items are sold at selling price and the imperfect items are sold at a discounted price immediately after the inspection process. The credit period offered by the seller and the selling price of the seller, both are considered as a decision variable. Relationship between seller and buyer is derived from the non-cooperative Seller- Stackelberg game approach. Optimal selling price, credit period and order quantity are determined by maximizing expected total profit of the supply chain. At the end, numerical examples with sensitivity analysis are given to explain the theory of the paper.

scholarly journals An EOQ model with stock dependent demand and imperfect quality items

2010 ◽  
Vol 20 (2) ◽  
pp. 237-247 ◽  
Author(s):  
Shibaji Panda
Keyword(s):  
Optimal Order ◽  
Optimal Solutions ◽  
Order Quantity ◽  
Screening Process ◽  
Imperfect Quality ◽  
Eoq Model ◽  
Total Profit ◽  
Approximate Optimal Solutions ◽  
Single Batch ◽  
Dependent Demand

This paper deals with an economic order quantity model where demand is stock dependent. Items received are not of perfect quality and each lot received contains percentage defective imperfect quality items, which follow a probability distribution. Two cases are considered. 1) Imperfect quality items are held in stock and sold in a single batch after a 100 percent screening process. 2) A hundred percent screening process is performed but the imperfect quality items are sold as soon as they are detected. Approximate optimal solutions are derived in both cases. A numerical example is provided in order to illustrate the development of the model. Sensitivity analysis is also presented, indicating the effects of percentage imperfect quality items on the optimal order quantity and total profit.

scholarly journals Impact of Imperfect Quality Items on Inventory Management for Two Warehouses with Shortages

2020 ◽  
Vol 5 (5) ◽  
pp. 869-885
Author(s):  
Aastha . ◽  
Sarla Pareek ◽  
Leopoldo Eduardo Cárdenas-Barrón ◽  
Mandeep Mittal
Keyword(s):  
Inventory Management ◽  
Storage Capacity ◽  
Inventory Model ◽  
Optimal Order ◽  
Defective Items ◽  
Imperfect Quality ◽  
Inspection Process ◽  
Total Profit ◽  
The Cost ◽  
The Impact

Generally, the majority of the inventory models work on the concept that overall units produced must be perfect in terms of quality and that the storage capacity of the warehouse is unlimited. In fact, under realistic conditions, it is not possible to manufacture products with complete perfection. Furthermore, there are always some limits associated with storage capacity of the warehouse. This paper formulates an inventory model that considers the impact of imperfect quality items and shortages. The cost of storage in rented warehouse (RW) is greater than own warehouse (OW) due to fact there are better preservation facilities in RW. This work considers that defective items are completely withdrawn after the inspection process. The purpose of this inventory model is to establish the optimal order quantity and backorder size that maximize the total profit. Some numerical examples are solved, and a sensitivity analysis is included.

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.

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.

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