Probabilistic EOQ model for deteriorating items under trade credit financing

De, Lakshmi Narayan; Goswami, Adrijit

doi:10.1080/00207720802435663

Cited by 22 publications

(16 citation statements)

References 14 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Three main sources were used: (i) a literature review on the trade process and trade credit modelling; (ii) interviews conducted with the aforementioned four companies in order to collect detailed information on the activities related to the trade process and affected by the DD programme; (iii) analysis of secondary sources, such as studies or reports that detail DD programmes, its working mechanisms and other relevant information, such as forms of revenues commonly implemented by service providers [23]. The outcome of this phase was: (i) the modelling of the profit for the buyer and the supplier, using a discrete-event analytical modelling approach, coherently with literature related to trade credit in the supply chain [25]- [26]; (ii) the determination of the inputs and the context data required to run the model. The detailed description of the model is reported in Section V.…”

Section: Objectives and Methodologiesmentioning

confidence: 99%

Supply Chain Finance: Modelling a Dynamic Discounting Programme

Gelsomino¹,

Mangiaracina²,

Perego³

et al. 2016

JOAMS

View full text Add to dashboard Cite

In the last 10 years, new financing opportunities (known as "Supply Chain Finance" or SCF) arose, exploiting the strength of new ICTs and supply chain links to optimise the working capital and create value for the organisations involved. One of the solutions within the SCF landscape, called Dynamic Discounting (DD), utilises trade process visibility granted by an ICT platform to allow the dynamic settlement of invoices in a buyer-supplier relation: for every day of payment in advance with respect to a predefined baseline, the supplier grants to the buyer a discount on the invoice nominal value. DD is a supply management tool for which a cash-rich anchor buyer can let suppliers (especially SMEs) fast-access cash, while gaining a relatively high rate of return. This paper aims to estimate, through the development of an analytical model, the potential benefit sof using a DD model in a buyer-supplier relation. After a brief review of relevant literature, the paper presents amodel that compares, for the supplier, the cost of granting a discount to the buyer with the benefit of an early payment, whereas for the buyer, the benefit of receiving a discount with the financial cost of an early settlement. This paper fills the gap in literature related to the definition of the processes underlying the adoption of DD, and more broadly the need for models to assess the benefits of the most innovative SCF schemas.  Index Terms-dynamic discounting, supply chain finance, working capital, supply chain management A. Supply Chain Finance Supply Chain Finance has been defined in many ways: as a set of financial solutions [6], [11], as an advanced form of Reverse Factoring [8], or, more broadly, as the inter-company integration and optimisation of financial processes in the supply chain [12]. Starting from the point of view of [12], for the scope of this paper, SCF can be defined as a mix of models, solutions, and services aiming to both optimise the financial performance and control working capital within

show abstract

Section: Objectives and Methodologiesmentioning

confidence: 99%

Supply Chain Finance: Modelling a Dynamic Discounting Programme

Gelsomino¹,

Mangiaracina²,

Perego³

et al. 2016

JOAMS

View full text Add to dashboard Cite

show abstract

“…A few of those which are rather effective and relevant for our investigation are mentioned here: Datta and Pal [11] considered both deterministic and probabilistic versions of power demand patterns with a variable rate of deterioration. De and Goswami [12] discussed a probabilistic model for deteriorating items. Shah [35] addressed a probabilistic order-level system with delay in payments and lead time.…”

Section: Review On Researchmentioning

confidence: 99%

A two-warehouse probabilistic model with price discount on backorders under two levels of trade-credit policy

Roy¹,

Pervin²,

Weber³

2020

Journal of Industrial &Amp; Management Optimization

View full text Add to dashboard Cite

It is impossible in this competitive era to assess the demand for items in advance. So, it is essential to refer to a stochastic demand function. In this paper, a probabilistic inventory model for deteriorating items is unfolded. Here, the supplier as well as the retailer adopt the trade-credit policy for their customers with the aim of promoting the market competition. Shortages are included into the model, and when stock on hand is zero, the retailer offers a price discount to those customers who are willing to back-order their demands. We consider two different warehouses in which the first one is an Own Warehouse (OW) where the deterioration is constant over time and the other is a Rented Warehouse (RW), and where the deterioration rate follows a Weibull distribution. An algorithm is provided for finding the solutions of the formulated model.Global convexity of the cost function is established which shows that our 2010 Mathematics Subject Classification. Primary: 90B05, 90B36; Secondary: 90C26.

show abstract

“…An extension of Huang's [30] work with regard to different selling price and purchasing cost is presented in Liao [63] to investigate the effect of a fixed credit period on the EPQ model with deteriorating items. De and Goswami [71] formulated two EOQ models under two-level trade credit, one with discrete cycle time and the other with continuous cycle time. They supposed exponentially deteriorating items with probabilistic demand to determine the optimal ordering policies.…”

Section: The Models With Deterioration and Two-level Tradementioning

confidence: 99%

Reviewing the Literature of Inventory Models under Trade Credit Contact

Molamohamadi

Leman

Zulkifli

2014

Discrete Dynamics in Nature and Society

View full text Add to dashboard Cite

In the classical inventory models, it was assumed that the buyer pays for the purchased items as they are received from the seller. In practice, however, the seller allows the buyer to settle the account with a delay period. Such a contract has attracted the attention of many researchers and practitioners in recent years. Thus, this paper addresses the researches with delay in payment and presents pertinent information about developments and extensions of such models to provide an up-to-date review of the studies conducted since 1973 and assist in developing the future researches.

show abstract

Probabilistic EOQ model for deteriorating items under trade credit financing

Cited by 22 publications

References 14 publications

Supply Chain Finance: Modelling a Dynamic Discounting Programme

Supply Chain Finance: Modelling a Dynamic Discounting Programme

A two-warehouse probabilistic model with price discount on backorders under two levels of trade-credit policy

Reviewing the Literature of Inventory Models under Trade Credit Contact

Contact Info

Product

Resources

About