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Integrated inventory models considering the two-level trade credit policy and a price-negotiation scheme

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  • Chen, Liang-Hsuan
  • Kang, Fu-Sen
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    Abstract

    This paper develops the integrated inventory models with permissible delay in payment, in which customers' demand is sensitive to the buyer's price. The models consider the two-level trade credit policy in the vendor-buyer and buyer-customer relationships in supply chain management. A simple recursive solution procedure is proposed for the integrated models to determine the buyer's optimal pricing and production/order strategy. Although the total profit from the buyer and vendor increases together, the buyer's share lessens. To compensate the buyer's loss due to the cooperative relationship, a negotiation system is presented in order to allocate the profit increase to the vendor and buyer to determine the pricing and production/order strategy. A numerical example and sensitivity analysis are provided to illustrate the proposed model. The results indicate that the total profit from the buyer and vendor together can increase, although a price discount is given to the buyer in the proposed models.

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    Bibliographic Info

    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 205 (2010)
    Issue (Month): 1 (August)
    Pages: 47-58

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    Handle: RePEc:eee:ejores:v:205:y:2010:i:1:p:47-58

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    Web page: http://www.elsevier.com/locate/eor

    Related research

    Keywords: Inventory Integrated models Price-negotiation system Price-sensitive demand Optimization;

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    Cited by:
    1. Seifert, Daniel & Seifert, Ralf W. & Protopappa-Sieke, Margarita, 2013. "A review of trade credit literature: Opportunities for research in operations," European Journal of Operational Research, Elsevier, vol. 231(2), pages 245-256.
    2. Taleizadeh, Ata Allah & Pentico, David W. & Saeed Jabalameli, Mohammad & Aryanezhad, Mirbahador, 2013. "An EOQ model with partial delayed payment and partial backordering," Omega, Elsevier, vol. 41(2), pages 354-368.
    3. Zhong, Yuan-Guang & Zhou, Yong-Wu, 2013. "Improving the supply chain's performance through trade credit under inventory-dependent demand and limited storage capacity," International Journal of Production Economics, Elsevier, vol. 143(2), pages 364-370.

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