Fuzzy-Based EOQ Model With Credit Financing and Backorders Under Human Learning

2021 ◽  
Vol 10 (4) ◽  
pp. 14-36
Author(s):  
Mahesh Kumar Jayaswal ◽  
Mandeep Mittal ◽  
Isha Sangal ◽  
Jayanti Tripathi
Keyword(s):  
Trade Credit ◽  
Planning Horizon ◽  
Human Learning ◽  
Lead Times ◽  
Credit Period ◽  
Eoq Model ◽  
Triangular Numbers ◽  
Credit Financing ◽  
Fuzzy Cost ◽  
The Impact

In this paper, an inventory model has been developed with trade credit financing and back orders under human learning. In this model, it is considered that the seller provides a credit period to his buyer to settle the account and the buyer accepts the credit period policy with certain terms and conditions. The impact of learning and credit financing on the size of the lot and the corresponding cost has been presented. For the development of the model, demand and lead times have been taken as the fuzzy triangular numbers are fuzzified, and then learning has been done in the fuzzy numbers. First of all, the consideration of constant fuzziness is relaxed, and then the concept of learning in fuzzy under credit financing is joined with the representation, assuming that the degree of fuzziness reduces over the planning horizon. Finally, the expected total fuzzy cost function is minimized with respect to order quantity and number of shipments under credit financing and learning effect. Lastly, sensitive analysis has been presented as a consequence of some numerical examples.

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.

A Fuzzy EOQ Model for Deteriorating Items With Allowable Shortage and Inspection Under the Trade Credit

2018 ◽  
pp. 233-249
Author(s):  
Chandra K. Jaggi ◽  
Bimal Kumar Mishra ◽  
T. C. Panda
Keyword(s):  
Trade Credit ◽  
Method Comparison ◽  
Deteriorating Items ◽  
Order Quantity ◽  
Centroid Method ◽  
Deterioration Rate ◽  
Eoq Model ◽  
Permissible Delay In Payment ◽  
Demand Rate ◽  
Fuzzy Cost

This chapter develops an economic order quantity model for deteriorating items with initial inspection, allowable shortage under the condition of permissible delay in payment by fuzzify the demand rate, deterioration rate and inspection parameter of non-defective parameter based on as triangular fuzzy numbers to fit the real word. The total fuzzy cost function has been defuzzified using signed distance and centroid method. Comparison between these two methods has also been discussed. The validity of the model has been established with the help of a hypothetical numerical example.

scholarly journals Two-Level Credit Financing for Noninstantaneous Deterioration Items in a Supply Chain with Downstream Credit-Linked Demand

2013 ◽  
Vol 2013 ◽  
pp. 1-22 ◽  
Author(s):  
Yong He ◽  
Hongfu Huang
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Financing Policy ◽  
Sensitive Analysis ◽  
Eoq Model ◽  
Replenishment Cycle ◽  
Credit Financing ◽  
Delay In Payments ◽  
Optimal Ordering ◽  
Total Average

Trade credit financing is a useful tool in business today, which can be characterized as the agreement between supply chain members such as permissible delay in payments. In this study, we assume that the items have the property of noninstantaneous deterioration and the demand is a function of downstream credit. Then, an EOQ model for noninstantaneous deterioration is built based on the two-level financing policy. The purpose of this paper is to maximize the total average profit by determine the optimal downstream credit period, the optimal replenishment cycle length, and the optimal ordering quantity per cycle. Useful theorems are proposed to characterize the method of obtaining the optimal solutions. Based on the theorems, an algorithm is designed, and numerical tests and sensitive analysis are provided. Lastly, according to the sensitive analysis, managerial insights are proposed.

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 The role of voucher sale in advance for a capital-constrained supply chain

2021 ◽  
Author(s):  
Haijun Wang ◽  
Guanmei Liu
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Optimal Choice ◽  
Bank Loan ◽  
Optimal Decision ◽  
Order Quantity ◽  
Credit Financing ◽  
The Impact

This paper studies voucher sale as an operational method to raise working capital for a supply chain, which consists of a supplier and a capital-constrained retailer. The retailer takes advantage of an online platform to sell vouchers and to get access to borrowing from a bank. By formulating a Stackelberg game model, we show the retailer's possible order quantities in the cases without and with bank loan and analyze the impact of voucher sale on the retailer's optimal choice of order quantity and the supplier's optimal wholesale price. We find that a smaller voucher's price induces the retailer to be more likely to order with loan from a bank while a larger voucher's value induces an order quantity with the loan more difficult to be repaid. In addition, if voucher's price is large, the supplier decides a wholesale price which leads the retailer not to borrow from a bank; and if voucher's price is small, the supplier's optimal decision is obtained by anticipating the retailer to borrow from a bank. We also analyze the impact of voucher sale in the presence of trade credit financing on the firms' decisions. The results show that the voucher's price should be small so that the retailer can repay the supplier if voucher's value is large; otherwise, the retailer either does not borrow from the supplier or may not repay the supplier. Besides, the supplier decides a wholesale price so that the retailer does not borrow or can repay the supplier, except that the voucher's value is large and the voucher's price is medium.

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>

Optimal Inventory and Credit Policies under Two Levels of Trade Credit Financing in an Inventory System with Date-Terms Credit Linked Demand

2014 ◽  
Vol 5 (4) ◽  
pp. 99-126 ◽  
Author(s):  
K.K. Aggarwal ◽  
Arun Kumar Tyagi
Keyword(s):  
Trade Credit ◽  
Credit Policy ◽  
Discounted Cash Flow ◽  
Inventory Policy ◽  
Credit Period ◽  
Systems Perspective ◽  
On Demand ◽  
Proposed Model ◽  
Net Profit ◽  
Credit Financing

Credit policy through its influence on demand indirectly affects the inventory policy which is designed to meet that demand; therefore inventory policy is interrelated with the credit policy. Consequently, they must be coordinated and should be determined simultaneously in a systems perspective. In this paper, a mathematical model is developed in a discounted cash flow (DCF) framework to jointly determine inventory and credit policies under two levels of trade credit financing in the presence of stimulating as well as disintegrating effect of credit period on demand. The objective of the model is to maximize the present value of firm's net profit per unit time by jointly optimizing the date-terms credit period and replenishment interval. Numerical example and sensitivity analysis are presented to illustrate the effectiveness of the proposed model and results are discussed.

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