Optimal ordering policies for a retailer in a supply chain with up-stream and down-stream trade credits

Teng, Jinn‐Tsair; Goyal, Sumeet

doi:10.1057/palgrave.jors.2602404

Cited by 116 publications

(40 citation statements)

References 11 publications

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“…Huang [19,20] extended Huang [18] by incorporating the limited storage space and finite replenishment rate, respectively. Later, Teng and Goyal [46] proposed a generalized formulation of Huang, 2003Huang, , 2006 Huang's models [18,19] and Teng and Chang [44] modified Huang [20] wherein the assumption that the trade credit offered by the supplier is longer than trade credit offered by the retailer is relaxed.…”

Section: Literature Reviewmentioning

confidence: 99%

Partial Trade Credit Policy of Retailer in Economic Order Quantity Models for Deteriorating Items with Expiration Dates and Price Sensitive Demand

Mahata¹

2015

J Math Model Algor

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In a supplier-retailer-customer supply chain, a credit-worthy retailer frequently receives a permissible delay on the entire purchase amount without collateral deposits from his/her supplier (i.e., an up-stream full trade credit). By contrast, a retailer usually requests his/her credit-risk customers to pay a fraction of the purchase amount at the time of placing an order, and then grants a permissible delay on the remaining balance (i.e., a down-stream partial trade credit). Also, in selecting an item for use, the selling price of that item is one of the decisive factors to the customers. It is well known that the higher selling price of item decreases the demand rate of that item where the lesser price has the reverse effect. Hence, the demand rate of an item is dependent on the selling price of that item. In addition, many products such as fruits, vegetables, high-tech products, pharmaceuticals, and volatile liquids not only deteriorate continuously due to evaporation, obsolescence and spoilage but also have their expiration dates. However, only a few researchers take the expiration date of a deteriorating item into consideration. This paper proposes an economic order quantity model to allow for: (a) the strategy that supplier offers retailer a full trade credit policy whereas the retailer offers their customers a partial trade credit policy, (b) selling price dependent demand rate, (c) a profit maximization objective and (d) deteriorating items not only deteriorate continuously but also have their expiration dates. For the objective function sufficient conditions for the existence and uniqueness of the optimal solution are provided. An efficient algorithm is designed to determine the optimal pricing and inventory policies for the retailer. Finally, numerical examples are presented to illustrate the proposed model and the effect of key parameters on optimal solution is examined.

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Section: Literature Reviewmentioning

confidence: 99%

Partial Trade Credit Policy of Retailer in Economic Order Quantity Models for Deteriorating Items with Expiration Dates and Price Sensitive Demand

Mahata¹

2015

J Math Model Algor

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“…Huang (2003) extended Goyal (1985) model to develop an EOQ model with up-stream and down-stream trade credits in which the length of down-stream trade credit period is less than or equal to the length of the up-stream trade credit period. Teng and Goyal (2007) complemented the shortcoming of Huang (2003) model and proposed a generalized formulation. Mahata and Goswami (2007) developed an inventory model to determine an optimal ordering policy for deteriorating items under two-level trade credit policy in the fuzzy sense.…”

Section: Introductionmentioning

confidence: 99%

Optimal replenishment and credit policy in supply chain inventory model under two levels of trade credit with time- and credit-sensitive demand involving default risk

Mahata¹,

Mahata²,

2017

J Ind Eng Int

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Traditional supply chain inventory modes with trade credit usually only assumed that the up-stream suppliers offered the down-stream retailers a fixed credit period. However, in practice the retailers will also provide a credit period to customers to promote the market competition. In this paper, we formulate an optimal supply chain inventory model under two levels of trade credit policy with default risk consideration. Here, the demand is assumed to be credit-sensitive and increasing function of time. The major objective is to determine the retailer's optimal credit period and cycle time such that the total profit per unit time is maximized. The existence and uniqueness of the optimal solution to the presented model are examined, and an easy method is also shown to find the optimal inventory policies of the considered problem. Finally, numerical examples and sensitive analysis are presented to illustrate the developed model and to provide some managerial insights.

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“…Huang [9] first establishes an EOQ model under the two-level trade credit policy. Later, Teng and Goyal [10] and Teng and Chang [11] generalize the model by relaxing the assumption that the credit period offered by the supplier is longer than that offered by retailer. Recently, Ho [12], Soni and Patel [13], and Feng et al [14] also consider the inventory models under two-level trade credit policy.…”

Section: Introductionmentioning

confidence: 99%

Managing Carbon Footprints under the Trade Credit

2017

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Abstract:We investigate how the retailer adjusts optimal ordering policy in the presence of cap-and-trade system and trade credit, and the corresponding changes of the retailer's total costs and carbon footprint. Trade credit is one of the most used short-term financing tools. Our study shows that carbon emissions trading will shorten the ordering cycle for products that emit more carbon dioxide during the storage stage, and therefore reduce the buying behavior stimulation effect of trade credit on these products. Under the cap-and-trade system, the retailer's total cost may increase or decrease, depending on the combination of carbon cap allocated to the retailer and the carbon price. Moreover, trade credit and the corresponding cost of capital affect the retailer's carbon emission reduction strategy by changing the retailers' consolidated cost during the ordering and inventory holding stages.

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Optimal ordering policies for a retailer in a supply chain with up-stream and down-stream trade credits

Cited by 116 publications

References 11 publications

Partial Trade Credit Policy of Retailer in Economic Order Quantity Models for Deteriorating Items with Expiration Dates and Price Sensitive Demand

Partial Trade Credit Policy of Retailer in Economic Order Quantity Models for Deteriorating Items with Expiration Dates and Price Sensitive Demand

Optimal replenishment and credit policy in supply chain inventory model under two levels of trade credit with time- and credit-sensitive demand involving default risk

Managing Carbon Footprints under the Trade Credit

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