An inventory model with a new credit drift: Flexible trade credit policy

Abstract

In most of the published articles dealing with optimal order quantity model under permissible delay in payments, it is assumed that the supplier only put forwards fully permissible delay in payments if retailer ordered a bulky sufficient quantity otherwise permissible delay in payments would not be permitted. Practically, in competitive market environments and recession phases of business, every supplier wants to attract more retailers by the help of providing good facilities for trading. Necessity of order quantity may put a negative pressure on supplier's demand. So, within the economic order quantity (EOQ) framework the main purpose of this paper is to broaden this extreme case by introducing a new credit policy, Flexible Trade Credit Policy (FTCP), for supplier which can help him provide more free space of trading to retailers. This policy, after adopting by suppliers, not only provides attractive trading environments for retailers but also enhances the demand of supplier due to the large number of new retailers. Here in, under this policy, an inventory system is investigated as a cost minimization problem to establish the retailer's optimal inventory cycle time and optimal order quantity. Three theorems are established to describe and to lighten optimal replenishment policies for the retailer. Finally, numerical examples are considered to illustrate all these theorems and managerial insights are given based on considered numerical examples.

Dual Stage Trade Credit Policy for Integrated Inventory System

“…Sarker et al [12] considered supplier's and retailer's trade-credit policy for fixed lifetime products and worked on the inventory model with time varying deterioration. Tyagi [22] worked an EOQ model for flexible trade credit policy for vendor-buyer system. He established three theorems for minimizing the total cost of the system.…”

Stocking and price-reduction decisions for non-instantaneous deteriorating items under time value of money

“…Although this research represents an important contribution to existing inventory models for deteriorating items with temporary price discounts, the model developed here can be further improved in several ways by including additional inventory system features. For instance, we may extend the proposed model to make it suitable for different trade credit environments (e.g., Ouyang et al, 2013;Shah & Cárdenas-Barrón, 2015;Teng et al, 2016;Tiwari et al, 2016;Tyagi, 2016;Wu et al, 2016), the presence of imperfect quality (e.g., Jaggi et al, 2017) or multiple products (e.g., Rodado et al, 2017;Shavandi et al, 2012). In addition, we could generalize the model to allow for an integrated producer-buyer policy, which may include defective items and/or imperfect inspection process (e.g., Khanna et al, 2017), machine breakdown (e.g., Luong & Karim, 2017), or the penalties and incentives provided by policymakers to incentive the reduction of greenhouse emission (e.g., Darma Wangsa, 2017).…”