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Retailer’s decision for ordering and credit policies for deteriorating items when a supplier offers order-linked credit period or cash discount

Author

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  • Shah, Nita H.
  • Cárdenas-Barrón, Leopoldo Eduardo

Abstract

In this study, the retailer’s decision for ordering and credit policies is analyzed when a supplier offers its retailer either a cash discount or a fixed credit period if the order quantity is greater than or equal to regular order policy. Then the retailer offers credit period to its customer which increases the demand and default risk and decreases profit. Furthermore, the units in the retailer’s inventory system deteriorate at a constant rate. Some theoretical results are derived to compute the optimal solution. The theoretical results are supported by numerical examples. The managerial acumens are provided.

Suggested Citation

  • Shah, Nita H. & Cárdenas-Barrón, Leopoldo Eduardo, 2015. "Retailer’s decision for ordering and credit policies for deteriorating items when a supplier offers order-linked credit period or cash discount," Applied Mathematics and Computation, Elsevier, vol. 259(C), pages 569-578.
  • Handle: RePEc:eee:apmaco:v:259:y:2015:i:c:p:569-578
    DOI: 10.1016/j.amc.2015.03.010
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    References listed on IDEAS

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    1. Jaggi, Chandra K. & Goyal, S.K. & Goel, S.K., 2008. "Retailer's optimal replenishment decisions with credit-linked demand under permissible delay in payments," European Journal of Operational Research, Elsevier, vol. 190(1), pages 130-135, October.
    2. Omprakash K. Gupta & Nita H. Shah & Kunal T. Shukla, 2011. "Supply chain inventory model for deteriorating items under two-level credit policy in declining market," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 3(2), pages 143-173.
    3. Chung, Kun-Jen & Huang, Yung-Fu, 2003. "The optimal cycle time for EPQ inventory model under permissible delay in payments," International Journal of Production Economics, Elsevier, vol. 84(3), pages 307-318, June.
    4. Nita H. Shah, 2009. "Optimisation of pricing and ordering under the two-stage credit policy for deteriorating items when the end demand is price and credit period sensitive," International Journal of Business Performance and Supply Chain Modelling, Inderscience Enterprises Ltd, vol. 1(2/3), pages 229-239.
    5. Teng, Jinn-Tsair & Chang, Chun-Tao, 2009. "Optimal manufacturer's replenishment policies in the EPQ model under two levels of trade credit policy," European Journal of Operational Research, Elsevier, vol. 195(2), pages 358-363, June.
    6. Abad, P. L. & Jaggi, C. K., 2003. "A joint approach for setting unit price and the length of the credit period for a seller when end demand is price sensitive," International Journal of Production Economics, Elsevier, vol. 83(2), pages 115-122, February.
    7. Chen, Sheng-Chih & Cárdenas-Barrón, Leopoldo Eduardo & Teng, Jinn-Tsair, 2014. "Retailer’s economic order quantity when the supplier offers conditionally permissible delay in payments link to order quantity," International Journal of Production Economics, Elsevier, vol. 155(C), pages 284-291.
    8. 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.
    9. Wu, Jiang & Ouyang, Liang-Yuh & Cárdenas-Barrón, Leopoldo Eduardo & Goyal, Suresh Kumar, 2014. "Optimal credit period and lot size for deteriorating items with expiration dates under two-level trade credit financing," European Journal of Operational Research, Elsevier, vol. 237(3), pages 898-908.
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    Cited by:

    1. repec:eee:proeco:v:197:y:2018:i:c:p:35-42 is not listed on IDEAS
    2. repec:eee:transe:v:114:y:2018:i:c:p:270-291 is not listed on IDEAS
    3. repec:wsi:apjorx:v:34:y:2017:i:01:n:s0217595917400103 is not listed on IDEAS
    4. repec:eee:apmaco:v:274:y:2016:i:c:p:430-458 is not listed on IDEAS

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