Optimal Integrated Inventory Policy for Deteriorating Units Under Selling-Price-Dependent Demand When Holding Cost Is Capacity-Utilization Dependent

2018 ◽  
pp. 74-89
Author(s):  
Ishaben Talati ◽  
Poonam Prakash Mishra
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Profit Maximization ◽  
Capacity Utilization ◽  
Optimal Number ◽  
Sensitivity Analyses ◽  
Selling Price ◽  
Sustainable Supply Chain ◽  
Modern Approach ◽  
Holding Cost

Conventional EOQ models always discussed profit maximization for one player at a time. But modern approach of supply chain suggests that growing and sustainable supply chain is possible only when benefits of all members of chain are protected. This chapter proposes an integrated model of supply chain where units in inventory are subjected to time dependent deterioration. Since demand is inversely proportional to selling price of the item, it is assumed selling price dependent. To make it more practical and feasible permissible delay on payments is offered only on purchase of a certain amount of quantity. This chapter helps to offer an algorithm to attain optimal number of orders, quantity, selling price and trade credit to maximize the joint profit of supply chain. Isolated profit of supply chain is compared with overall system profit. Results are validated by numerical examples and further sensitivity analyses of important parameters are discussed. Conclusion obtained from the chapter is useful to supply chains involved with FMCGs, Drugs, Fashion goods and home decor textile.

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 Pricing Decisions for a Sustainable Supply Chain in the Presence of Potential Strategic Customers

2020 ◽  
Vol 12 (4) ◽  
pp. 1655 ◽  
Author(s):  
Xinmin Liu ◽  
Kangkang Lin ◽  
Lei Wang ◽  
Lili Ding
Keyword(s):  
Supply Chain ◽  
Purchase Behavior ◽  
Optimal Pricing ◽  
Selling Price ◽  
Sustainable Supply Chain ◽  
Purchasing Decisions ◽  
Strategic Customers ◽  
Pricing Decisions ◽  
Leading Role ◽  
Will Force

In service to sustainable development, consumers have begun to prefer green products for their special environmental characteristics, and many enterprises are introducing new products to improve their competitiveness, but this tactic may not work if customers are strategic, as they might choose to defer purchasing decisions while prices are high and wait for lower prices in the future. Considering the differences in purchase behavior, we divided customers into two groups—strategic customers and myopic customers. Furthermore, we distinguished three types of strategic customers according to their different preferences to analyze the optimal pricing and greenness strategies in sustainable supply chain in strategic customer scenarios. Our results led to the following conclusions. (1) Strategic customers’ individual preferences can affect optimum equilibrium and that a higher purchase price threshold can stimulate the manufacturer to improve greenness and set a higher price, while a higher greenness purchase threshold and purchase value threshold will force manufacturer to set a lower price. (2) We observed that strategic customers can increase demand and vender profit. As the number of strategic customers increases, selling price and greenness will experience downward trends in a price threshold scenario but upward trends in greenness threshold and value threshold scenarios. (3) A firm can take measures to mitigate the effects of strategic customers by adjusting price and greenness dynamically according to price and greenness sensitivity, which can play a leading role in actively influencing strategic customer behavior.

scholarly journals Impact of Energy and Carbon Emission of a Supply Chain Management with Two-Level Trade-Credit Policy

Energies ◽  
2021 ◽  
Vol 14 (6) ◽  
pp. 1569
Author(s):  
Vandana ◽  
S. R. Singh ◽  
Dharmendra Yadav ◽  
Biswajit Sarkar ◽  
Mitali Sarkar
Keyword(s):  
Supply Chain ◽  
Energy Consumption ◽  
Supply Chain Management ◽  
Carbon Emission ◽  
Trade Credit ◽  
Selling Price ◽  
Chain Management ◽  
Optimum Energy ◽  
Demand Rate ◽  
Dependent Demand

Supply chain management aims to integrate environmental thinking with efficient energy consumption into supply chain management. It includes a flexible manufacturing process, more product delivery to customers, optimum energy consumption, and reduced waste. The manufacturing process can be made more flexible through volume agility. In this scenario, production cannot be constant, and with the concept of volume agility, production is taken as a decision variable under the effect of optimum energy consumption. Considering a two-echelon supply chain, we consider a producer and supplier with two-level-trade-credit policies (TLTCP) with the optimum consumption. To reduce the integrated total inventory cost, we believe that demand is a function of the credit period and selling price. The cost function is analyzed, either with the credit period dependent demand rate or with the selling price dependent demand rate through the numerical examples under energy costs. Energy and carbon emission costs are introduced in setup/ordering cost, holding cost, and item cost for producer and supplier. The effect of inflation on the total cost cannot be ignored; this model is being developed for deteriorating items with the simultaneous impact of volume agility, energy, carbon emission cost, and two-level-trade-credit policies with inflation. This supply chain model was solved analytically and obtained the optimum decision variables in a quasi-closed form solution. An illustrative theorem is being utilized to analyze the optimum result for all the decision parameters. The convexity of the objective function is being obtained analytically as well as graphically. Finally, numerical examples and sensitivity analysis are employed to illustrate the present study and with managerial insights.

scholarly journals Coordinating contracts as an instrument of supply chain profit maximization under short-term financing necessity

2020 ◽  
Vol 13 ◽  
pp. 57-94
Author(s):  
Irina Berezinets ◽  
◽  
Tatyana Voronova ◽  
Nikolay Zenkevich ◽  
Natalia Nikolchenko ◽  
...  
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Wholesale Price ◽  
Profit Maximization ◽  
Revenue Sharing ◽  
Expected Profit ◽  
Short Term ◽  
Bank Financing ◽  
Revenue Sharing Contract ◽  
Credit Financing

In this paper the problem of the supply chain expected profit maximization under the assumption of the short-term financing necessity for one of the supply chain parties using a coordinating contract is considered. The solution is derived for a two-echelon supply chain under the assumption of product demand being distributed as uniformly. A revenue-sharing contract with bank financing and a modified revenue-sharing contract with trade credit financing are explored. It is stated that none of the studied contracts is coordinating, as they do not provide the supplier’s expected profit maximum. The conditional coordination of supply chain with a modified revenue-sharing contract with trade credit financing is considered if the supply chain and the retailer’s expected profit maximum are reached and the supplier’s expected profit is greater than in case of application of a modified wholesale price contract with trade credit financing and a revenue-sharing contract with bank financing. It is proved that it is beneficial for both supply chain parties and the problem of the supply chain expected profit maximization under the assumption of the short-term financing necessity for one of the supply chain parties can be solved using a modified revenue-sharing contract with trade credit financing.

scholarly journals Supply chain coordination with trade credit and price discount with/without environmental considerations

2021 ◽  
Author(s):  
Salem Mousa Salem Aljazzar
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Supply Chain Coordination ◽  
Performance Measure ◽  
Sensitivity Analyses ◽  
Total System ◽  
Permissible Delay In Payments ◽  
Price Discounts ◽  
Trade Credits ◽  
Delay In Payments

For a supply chain coordination to be effective and profitable, it requires a working mechanism among its members to entice some players to join a partnership. Two of the well-known trade credits that are widely used by businesses are the permissible delay in payments and price discounts. This thesis presents models for coordinating supply chains with both trade credits. The first model investigates the effect of utilizing delay in payments in a two-level (manufacturer-retailer) supply chain. It modifies and analyzes three known models of different production and shipping policies to account for delays in payments; it then compares them and highlights the production policy that performed the best with the total system cost being the performance measure. The second model analyzes the coordination of a three-level (supplier-manufacturer- retailer) supply chain with the delay in payments. It analyzes nine different scenarios of permissible delay among the three players. A simulation study was performed and a thorough analysis of the results was used to identify the limitations of all scenarios and to draw some managerial insights and findings. The third model investigates the effect of coupling permissible delay in payments and price discounts for coordinating a three-level. The analysis considers nine different cases of delay-in-payments along with eight cases of price discounts among the three players in the supply chain, totaling seventy-two cases. The numerical examples and the sensitivity analyses show that the coupling of delay-in- payments and price discounts maximizes the supply chain profit more than when using a single mechanism at a time. The fourth model investigates a two-level supply chain by studying the effects of various scenarios for delay-in-payments when including some environmental costs such as fuel and emissions from manufacturing and transportation. The objective of the model is to optimize the environmental and the economic performance of the supply chain. The results show that delay-in-payments improves the economic and the environmental performance of a supply chain.

scholarly journals Supply chain coordination with trade credit and price discount with/without environmental considerations

2021 ◽  
Author(s):  
Salem Mousa Salem Aljazzar
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Supply Chain Coordination ◽  
Performance Measure ◽  
Sensitivity Analyses ◽  
Total System ◽  
Permissible Delay In Payments ◽  
Price Discounts ◽  
Trade Credits ◽  
Delay In Payments

For a supply chain coordination to be effective and profitable, it requires a working mechanism among its members to entice some players to join a partnership. Two of the well-known trade credits that are widely used by businesses are the permissible delay in payments and price discounts. This thesis presents models for coordinating supply chains with both trade credits. The first model investigates the effect of utilizing delay in payments in a two-level (manufacturer-retailer) supply chain. It modifies and analyzes three known models of different production and shipping policies to account for delays in payments; it then compares them and highlights the production policy that performed the best with the total system cost being the performance measure. The second model analyzes the coordination of a three-level (supplier-manufacturer- retailer) supply chain with the delay in payments. It analyzes nine different scenarios of permissible delay among the three players. A simulation study was performed and a thorough analysis of the results was used to identify the limitations of all scenarios and to draw some managerial insights and findings. The third model investigates the effect of coupling permissible delay in payments and price discounts for coordinating a three-level. The analysis considers nine different cases of delay-in-payments along with eight cases of price discounts among the three players in the supply chain, totaling seventy-two cases. The numerical examples and the sensitivity analyses show that the coupling of delay-in- payments and price discounts maximizes the supply chain profit more than when using a single mechanism at a time. The fourth model investigates a two-level supply chain by studying the effects of various scenarios for delay-in-payments when including some environmental costs such as fuel and emissions from manufacturing and transportation. The objective of the model is to optimize the environmental and the economic performance of the supply chain. The results show that delay-in-payments improves the economic and the environmental performance of a supply chain.

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.

Non-instantaneous deteriorating inventory model under the joined effect of trade-credit, preservation technology and advertisement policy

Kybernetes ◽  
2019 ◽  
Vol 49 (6) ◽  
pp. 1645-1674 ◽  
Author(s):  
Abu Hashan Md Mashud ◽  
Md. Rakibul Hasan ◽  
Hui Ming Wee ◽  
Yosef Daryanto
Keyword(s):  
Trade Credit ◽  
Optimization Technique ◽  
Inventory Model ◽  
Sensitivity Analyses ◽  
Selling Price ◽  
Content Type ◽  
Technology Investment ◽  
Deterioration Rate ◽  
Preservation Technology ◽  
Preservation Technology Investment

Purpose This paper aims to simultaneously consider an inventory model with price and advertisement dependent demand, non-instantaneous deterioration rate with preservation technology investment, partially backlogged shortages and trade credit. Design/methodology/approach This model considered a non-instantaneous deterioration, which starts after a certain storage period with a constant rate. The proposed model focused on two things. The first one is to reduce the deterioration rate by preservation technology investment, and the second one is using an appropriate trade credit period to maximize the total profit. The classical optimization technique is used to solve the problem. Findings The authors found that trade credit, advertising cost, preservation technology affect the total cost and selling price is one of the most important decision variables affecting the model. Practical implications This study provides a reference for a manufacturer and a retailer on making inventory decisions under different pricing, advertisement expense, preservation technology investment and credit strategies. Four cases are presented to illustrate the inventory model. Sensitivity analyses are performed to gain managerial insights for decision-making. Originality/value The study simultaneously considers a non-instantaneous deterioration inventory model, trade-credit, and preservation technology and advertisement policy. From our literature search, no researcher has undergone this type of study.

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