IDEAS home Printed from https://ideas.repec.org/a/taf/tprsxx/v54y2016i9p2709-2730.html
   My bibliography  Save this article

Optimal cycle time and inventory decisions in coordinated and non-coordinated two-echelon inventory system under inflation and time value of money

Author

Listed:
  • Dega Nagaraju
  • A. Ramakrishna Rao
  • S. Narayanan
  • P. Pandian

Abstract

In this paper, a mathematical model is developed for a coordinated and non-coordinated two-echelon inventory system comprising of a single manufacturer and a single retailer. The objective of the model is to demonstrate the optimality of cycle time and inventory decisions under the phenomena of different inflation rates at the manufacturer and retailer points. Also, it is aimed at determining the annual net revenue of the supply chain (SC). In the proposed model, the present value of the inflated ordering/set-up costs, purchase/unit costs, carrying costs and the gross revenue is computed for the retailer, manufacturer and the SC. A numerical example is devised to illustrate the optimality of decision variables and the objective function. Also, the sensitivity analysis is carried out. Results show that the present value of the annual net revenue of the retailer, manufacturer and SC decreases with increased inflation rate at the retailer and decreased inflation rate at the manufacturer simultaneously.

Suggested Citation

  • Dega Nagaraju & A. Ramakrishna Rao & S. Narayanan & P. Pandian, 2016. "Optimal cycle time and inventory decisions in coordinated and non-coordinated two-echelon inventory system under inflation and time value of money," International Journal of Production Research, Taylor & Francis Journals, vol. 54(9), pages 2709-2730, May.
    • Handle: RePEc:taf:tprsxx:v:54:y:2016:i:9:p:2709-2730
    DOI: 10.1080/00207543.2015.1126679
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00207543.2015.1126679
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00207543.2015.1126679?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Vivek Moorthy & Shrikant Kolhar, 2011. "Rising food inflation and India's monetary policy," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 4(1), pages 73-94, April.
    2. Ben-Daya, M. & Hariga, M., 2004. "Integrated single vendor single buyer model with stochastic demand and variable lead time," International Journal of Production Economics, Elsevier, vol. 92(1), pages 75-80, November.
    3. Nakamura, Alice O. & Nakamura, Emi & Nakamura, Leonard I., 2011. "Price dynamics, retail chains and inflation measurement," Journal of Econometrics, Elsevier, vol. 161(1), pages 47-55, March.
    4. Chung, Kun-Jen & Goyal, Suresh Kumar & Huang, Yung-Fu, 2005. "The optimal inventory policies under permissible delay in payments depending on the ordering quantity," International Journal of Production Economics, Elsevier, vol. 95(2), pages 203-213, February.
    5. Richards, Timothy J. & Allender, William J. & Hamilton, Stephen F., 2012. "Commodity price inflation, retail pass-through and market power," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 50-57.
    6. Chung, Kun-Jen & Liao, Jui-Jung, 2006. "The optimal ordering policy in a DCF analysis for deteriorating items when trade credit depends on the order quantity," International Journal of Production Economics, Elsevier, vol. 100(1), pages 116-130, March.
    7. Huang, Yung-Fu, 2007. "Economic order quantity under conditionally permissible delay in payments," European Journal of Operational Research, Elsevier, vol. 176(2), pages 911-924, January.
    8. B.C. Giri & T. Maiti, 2013. "Supply chain model with price- and trade credit-sensitive demand under two-level permissible delay in payments," International Journal of Systems Science, Taylor & Francis Journals, vol. 44(5), pages 937-948.
    9. Huang, Yung-Fu & Hsu, Kuang-Hua, 2008. "An EOQ model under retailer partial trade credit policy in supply chain," International Journal of Production Economics, Elsevier, vol. 112(2), pages 655-664, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Linh N. K. Duong & Lincoln C. Wood & William Y. C. Wang, 2018. "Effects of Consumer Demand, Product Lifetime, and Substitution Ratio on Perishable Inventory Management," Sustainability, MDPI, vol. 10(5), pages 1-17, May.
    2. Khakbaz, Amir & Mensi, Walid & Tirkolaee, Erfan Babaee & Hammoudeh, Shawkat & Simic, Vladimir, 2023. "The combined effects of interest and inflation rates on inventory systems: A comparative analysis across countries," International Journal of Production Economics, Elsevier, vol. 266(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ting, Pin-Shou, 2015. "Comments on the EOQ model for deteriorating items with conditional trade credit linked to order quantity in the supply chain management," European Journal of Operational Research, Elsevier, vol. 246(1), pages 108-118.
    2. Huang, Yung-Fu & Hsu, Kuang-Hua, 2008. "An EOQ model under retailer partial trade credit policy in supply chain," International Journal of Production Economics, Elsevier, vol. 112(2), pages 655-664, April.
    3. Chung, Kun-Jen & Liao, Jui-Jung, 2011. "The simplified solution algorithm for an integrated supplier-buyer inventory model with two-part trade credit in a supply chain system," European Journal of Operational Research, Elsevier, vol. 213(1), pages 156-165, August.
    4. Xu, Xinhan & Chen, Xiangfeng & Jia, Fu & Brown, Steve & Gong, Yu & Xu, Yifan, 2018. "Supply chain finance: A systematic literature review and bibliometric analysis," International Journal of Production Economics, Elsevier, vol. 204(C), pages 160-173.
    5. Ouyang, Liang-Yuh & Ho, Chia-Huei & Su, Chia-Hsien, 2008. "Optimal strategy for an integrated system with variable production rate when the freight rate and trade credit are both linked to the order quantity," International Journal of Production Economics, Elsevier, vol. 115(1), pages 151-162, September.
    6. Bhunia, A.K. & Shaikh, Ali Akbar, 2015. "An application of PSO in a two-warehouse inventory model for deteriorating item under permissible delay in payment with different inventory policies," Applied Mathematics and Computation, Elsevier, vol. 256(C), pages 831-850.
    7. A. Thangam, 2017. "Retailer’s optimal replenishment policy in a two-echelon supply chain under two-part delay in payments and disruption in delivery," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 8(1), pages 26-46, January.
    8. Ramasesh, Ranga V., 2010. "Lot-sizing decisions under limited-time price incentives: A review," Omega, Elsevier, vol. 38(3-4), pages 118-135, June.
    9. Pourmohammad Zia, Nadia & Taleizadeh, Ata Allah, 2015. "A lot-sizing model with backordering under hybrid linked-to-order multiple advance payments and delayed payment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 82(C), pages 19-37.
    10. Teng, Jinn-Tsair & Min, Jie & Pan, Qinhua, 2012. "Economic order quantity model with trade credit financing for non-decreasing demand," Omega, Elsevier, vol. 40(3), pages 328-335.
    11. Liao, Jui-Jung, 2008. "An EOQ model with noninstantaneous receipt and exponentially deteriorating items under two-level trade credit," International Journal of Production Economics, Elsevier, vol. 113(2), pages 852-861, June.
    12. Jinn-Tsair Teng & Kuo-Ren Lou, 2012. "Seller’s optimal credit period and replenishment time in a supply chain with up-stream and down-stream trade credits," Journal of Global Optimization, Springer, vol. 53(3), pages 417-430, July.
    13. Johari, Maryam & Hosseini-Motlagh, Seyyed-Mahdi & Nematollahi, Mohammadreza & Goh, Mark & Ignatius, Joshua, 2018. "Bi-level credit period coordination for periodic review inventory system with price-credit dependent demand under time value of money," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 270-291.
    14. Pattnaik, Debidutta & Hassan, Mohammad Kabir & Kumar, Satish & Paul, Justin, 2020. "Trade credit research before and after the global financial crisis of 2008 – A bibliometric overview," Research in International Business and Finance, Elsevier, vol. 54(C).
    15. Ho, Chia-Huei & Ouyang, Liang-Yuh & Su, Chia-Hsien, 2008. "Optimal pricing, shipment and payment policy for an integrated supplier-buyer inventory model with two-part trade credit," European Journal of Operational Research, Elsevier, vol. 187(2), pages 496-510, June.
    16. Ping Ruan & Yung-Fu Huang & Ming-Wei Weng, 2022. "Impact of COVID-19 on Supply Chains: A Hybrid Trade Credit Policy," Mathematics, MDPI, vol. 10(8), pages 1-22, April.
    17. Jen-Yen Lin & Ming-Jong Yao, 2020. "The joint replenishment problem with trade credits," Journal of Global Optimization, Springer, vol. 76(2), pages 347-382, February.
    18. Chung, Kun-Jen & Eduardo Cárdenas-Barrón, Leopoldo & Ting, Pin-Shou, 2014. "An inventory model with non-instantaneous receipt and exponentially deteriorating items for an integrated three layer supply chain system under two levels of trade credit," International Journal of Production Economics, Elsevier, vol. 155(C), pages 310-317.
    19. Chandan Mahato & Gour Chandra Mahata, 2021. "Optimal inventory policies for deteriorating items with expiration date and dynamic demand under two-level trade credit," OPSEARCH, Springer;Operational Research Society of India, vol. 58(4), pages 994-1017, December.
    20. Bhunia, A.K. & Jaggi, Chandra K. & Sharma, Anuj & Sharma, Ritu, 2014. "A two-warehouse inventory model for deteriorating items under permissible delay in payment with partial backlogging," Applied Mathematics and Computation, Elsevier, vol. 232(C), pages 1125-1137.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:tprsxx:v:54:y:2016:i:9:p:2709-2730. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TPRS20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.