The optimal replenishment decisions under two levels of trade credit policy depending on the order quantity

Kreng, Victor B.; Tan, Shao-Jung

doi:10.1016/j.eswa.2009.12.014

Cited by 94 publications

(37 citation statements)

References 33 publications

(34 reference statements)

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“…Chang et al (2010) maximized the profit of the decision maker under floor-space constraint and with rampant inventory at the end of the cycle time. Kreng and Tan (2010) studied optimal policy under two levels credit period which are order dependent when system suffers imperfect production phase. Kreng and Tan (2011) discussed finite replenishment inventory model under two-level trade credit incorporating the scenarios of defective items and scrape items.…”

Section: Introductionmentioning

confidence: 99%

Retailer’s optimal policies for deteriorating items with a fixed lifetime under order-linked conditional trade credit

Shah¹

2017

10.5267/j.uscm

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The player uses credit financing to perform profitable business. We analyze an economic order quantity model in which items have a fixed lifetime and deteriorate over time. The supplier offers the retailer a full credit period whenever the retailer orders more than or equal to a prespecified quantity. If the retailer orders less than pre-specified order quantity, then the retailer will do partial payment to the supplier and avail of delay in payments for the remaining outstanding amount. The demand is price-sensitive. The retailer's profit is maximized by setting appropriate retail price and replenishment time. The algorithm is developed to choose the best policy for the decision maker from the number of alternatives. Numerical data is used to validate the theoretical developments. Managerial insights are discussed. It is observed that for a given units to qualify for avail of partial credit period, increase in ordering cost decreases profit of the retailer. The increase in rate of the purchase cost to avail of delay payment suggests that to have a more profit, retailer should deplete stock before the allowable credit period.Growing Science Ltd. All rights reserved. 7

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Section: Introductionmentioning

confidence: 99%

Retailer’s optimal policies for deteriorating items with a fixed lifetime under order-linked conditional trade credit

Shah¹

2017

10.5267/j.uscm

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“…The primary difference of this paper as compared to previous studies is that we introduce a generalized inventory model by relaxing the traditional EOQ model in the following three ways: (1) the items deteriorate continuously; (2) greater than or equal to a predetermined quantity, then both of the supplier and the retailer are taking trade credit police; otherwise, the delay in payments is not permitted; (3) the present value of all future cash-flows cost instead of the average cost. The proposed of the paper is minimizing the present value of all future cash-flow cost of the retailer.…”

Section: Discussionmentioning

confidence: 99%

“…Huang [1] was the first to explore an EOQ model under the two-level trade credit. Kreng and Tan [2] and Ouyang et al [3] proposed to determine the optimal replenishment decisions if the purchasers order quantity is greater than or equal to a predetermined quantity. Teng et al [4] extended the constant demand to a linear non-decreasing demand function of time and incorporate supplier offers a permissible delay linked to order quantity under two levels of trade credit.…”

Section: Introductionmentioning

confidence: 99%

Optimal Economic Ordering Policy with Trade Credit and Discount Cash-Flow Approach

Jiaqin¹,

Jiangtao

Min

2015

TELKOMNIKA

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Keywords: two-level trade credit, deteriorating items, order quantity dependent credit, discount cash-flow, EOQCopyright © 2015 Universitas Ahmad Dahlan. All rights reserved. IntroductionIn the traditional economic order quantity models assumed the purchaser must pay for the items as soon as the items received. However, in real markets, to stimulate retailer's ordering qualities the supplier allows a certain fixed permissible delay in payment to settle the amount. Similarly, a retailer may offer his/her customers a permissible delay period to settle the outstanding balance when he/she received a trade credit by the supplier, which is a two-level trade credit. Huang [1] was the first to explore an EOQ model under the two-level trade credit. Kreng and Tan [2] and Ouyang et al [3] proposed to determine the optimal replenishment decisions if the purchasers order quantity is greater than or equal to a predetermined quantity. Teng et al [4] extended the constant demand to a linear non-decreasing demand function of time and incorporate supplier offers a permissible delay linked to order quantity under two levels of trade credit. Teng et al [5] established an EOQ with trade credit financing for a linear nondecreasing demand function of time. Paulus [6] shed light on how search strategy can be used to gain the maximum benefit of information search activities. Feng et al [7] investigated the retailer's optimal cycle time and optimal payment time under the supplier's cash discount and trade credit policy within the EPQ framework. Wang et al [8] established an economic order quantity model for deteriorating items with maximum lifetime and credit period increasing demand and default risk. Liao [9] developed an inventory model by considering two levels of trade credit, limited storage capacity. Wu et al [10] discussed an economic order quantity model under two levels trade credit, and assumed deteriorating items have their expiration dates. Enda et al [11] presented a generic solution to the sensitive issue of PCI Compliance. Teng et al [12] proposed an EPQ model from the seller's prospective to determine his/her optimal trade credit period, and in his paper production cost declined and obeyed a learning curve phenomenon. However, the above inventory models did not consider the effects of the time value of money. In fact, as the value of money changes with time, it is necessary to take the effect of the time value of money on the inventory policy into consideration. Chang et al [13] investigated the DCF approach to establish an inventory model for deteriorating items with trade credit based on the order quantity. Chung and Liao [14] adopted the DCF approach to discuss the effect of trade credit depending on the ordering quantity. Liao and Huang [15] extended the inventory model to

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“…Kreng and Tan [4] evaluated the inventory model under two levels of trade credit policy depending on the order quantity. Mahata and Goswami [5] also extended the inventory model to the case of deteriorating products under trade credit..…”

Section: Introductionmentioning

confidence: 99%

Buyer’s Pricing and Lot-sizing Policy with Price Dependent Demand under Day terms Supplier Credit in a Two-Stage Supply Chain

Shinn¹

2017

AJMAHS

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As an effective means of price discrimination, some suppliers offer credit periods to the buyers in order to stimulate the demand for the product they produce. The availability of the credit period from the supplier enables the buyer to choose his selling price from a wider range of price option. Since the buyer's lot-size is affected by the customer's demand rate of the product, the problems of determining the selling price and the lot-size are interdependent and must be solved simultaneously. In this regard, this paper deals with the problem of determining the buyer's optimal selling price and lot-size simultaneously when the supplier permits delay in payments for an order of a product. The positive effects of credit period on the product demand can be integrated into the inventory model through the consideration of retailing situations, where the demand rate is a function of the selling price the buyer sets for the product. Thus, it is also assumed that the customer's demand rate is represented by a downward slopping linear function of the selling price. Investigation of the properties of an optimal solution allows us to develop an algorithm whose validity is illustrated using an example problem.

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The optimal replenishment decisions under two levels of trade credit policy depending on the order quantity

Cited by 94 publications

References 33 publications

Retailer’s optimal policies for deteriorating items with a fixed lifetime under order-linked conditional trade credit

Retailer’s optimal policies for deteriorating items with a fixed lifetime under order-linked conditional trade credit

Optimal Economic Ordering Policy with Trade Credit and Discount Cash-Flow Approach

Buyer’s Pricing and Lot-sizing Policy with Price Dependent Demand under Day terms Supplier Credit in a Two-Stage Supply Chain

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