An EOQ model for deteriorating items analyzing retailer’s optimal strategy under trade credit and return policy with nonlinear demand and resalable returns

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.

Ordering Policies of a Deteriorating Item in an EOQ Model under Upstream Partial Order-Quantity-Dependent Trade Credit and Downstream Full Trade Credit

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.

Optimal Ordering Strategy of a Replenishment Policy for Deteriorating Items under Retailer’s Partial Trade Credit Policy

This paper investigates the economic order quantity inventory model for a retailer under two levels of trade credit to reflect the supply chain management situation. It is assumed that the retailer maintains a powerful position and can obtain full trade credit offered by supplier, yet the retailer just offers the partial trade credit to customers. Under these conditions, the retailer can obtain the most benefits. This study also investigates the retailer’s inventory policy for deteriorating items in a supply chain management situation as a cost minimization problem. The present study shows that the annual total variable cost for the retailer is convex, that is, a unique solution exists. Mathematical theorems and algorithms are developed to efficiently determine the optimal inventory policy for the retailer. The results in this paper generalize some already published results. Finally, numerical examples are given to illustrate the theorems and obtain managerial phenomena.