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.

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.

Optimal Ordering for Deteriorating Items of Fixed-Life with Quadratic Demand and Two-Level Trade Credit

2016 ◽  
pp. 1-16 ◽  
Author(s):  
Nita H. Shah ◽  
Mrudul Yogeshkumar Jani
Keyword(s):  
Sensitivity Analysis ◽  
Decision Maker ◽  
Trade Credit ◽  
Life Time ◽  
Deteriorating Items ◽  
Total Cost ◽  
Credit Period ◽  
Numerical Examples ◽  
Optimal Ordering ◽  
Purchase Quantity

This chapter studies the retailer's ordering policies when items in the stocking system has fixed life time and subject to deteriorate with time. The demand is considered to be quadratically decreasing. The supplier offers credit period to the retailer which in turn is partially passed on to customer. The retailer is the decision maker and the objective is to minimize the total cost of the system by ordering optimum purchase quantity. Numerical examples are given to find the best possible scenario for the retailer. Sensitivity analysis is carried out to derive player's insights.

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 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

scholarly journals Optimizing a Sustainable Supply Chain Inventory Model for Controllable Deterioration and Emission Rates in a Greenhouse Farm

Mathematics ◽  
2021 ◽  
Vol 9 (5) ◽  
pp. 495
Author(s):  
Umakanta Mishra ◽  
Abu Hashan Md Mashud ◽  
Ming-Lang Tseng ◽  
Jei-Zheng Wu
Keyword(s):  
Supply Chain ◽  
Carbon Emissions ◽  
Trade Credit ◽  
Numerical Study ◽  
Inventory Model ◽  
Green Technology ◽  
Solution Technique ◽  
Emission Rates ◽  
Sustainable Supply Chain ◽  
Green Technologies

This study investigated how greenhouse managers should invest in preservation and green technologies and introduce trade credit to increase their profits. We propose a supply chain inventory model with controllable deterioration and emission rates under payment schemes for shortage and surplus, where demand depends on price and trade credit. Carbon emissions and deterioration are factors affecting global warming, and many greenhouse managers have focused on reducing carbon emissions. Carbon caps and tax-based incentives have been used in many greenhouses to achieve such reduction. Because of the importance of reducing carbon emissions for developing a green supply chain, various studies have investigated how firms deal with carbon emission constraints. In this continuation, we have used green technology to curb the excessive emissions from the environment or make it clean from CO2. In a seller–buyer relationship, the seller can offer a trade credit period to the buyer to manage stock and stimulate demand. Deterioration may become a challenge for most firms as they are under time constraints control, and preservation technology could help. This study proposes three novel inventory strategies for a sustainable supply chain (full backorder, partial backorder, and no backorder), linking all these important issues. The solution optimizes total annual profit for inventory shortage or surplus. We conducted a numerical study with three examples to evaluate the model’s authenticity and effectiveness and demonstrate the solution technique. The deterioration and emission rates can be included in a trade credit policy to increase greenhouse profits. The results suggest that greenhouse managers could apply the proposed model to manage real-world situations.

scholarly journals Two – Warehouse Inventory System Model for Deteriorating Items Considering Partial Upstream Trade Credit Financing

2021 ◽  
pp. 69-80
Author(s):  
Z. H. Aliyu ◽  
B. Sani
Keyword(s):  
Sensitivity Analysis ◽  
Credit Risk ◽  
Trade Credit ◽  
Optimal Solution ◽  
Inventory System ◽  
System Model ◽  
Credit Period ◽  
Business Transaction ◽  
Credit Financing ◽  
Relevant Cost

In this study, we developed an inventory system model under two – level trade credit where the supplier considers the retailer as credit risk but the retailer considers the customers as credit worthy. Therefore, the retailer is given a trade credit period on  proportion of the goods ordered whenever he/she pays for proportion of the goods immediately after delivery. In the same vein, the retailer passes the same grace to the customers but without attaching any condition as the customers are assumed credit worthy. This partial upstream trade credit is offered to reduce the risk of failure in payment on the business transaction especially that most retailers are involved in bulk orders. The relevant cost functions are determined and a numerical example is given. Sensitivity analysis was carried out to see the effect of changes in parameters on the optimal solution of the model.

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