IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v10y2018i10p3723-d176130.html
   My bibliography  Save this article

Optimal Replenishment for Perishable Products with Inventory-Dependent Demand and Backlogging under Continuous and Discrete Progressive Payments

Author

Listed:
  • Longfei He

    (College of Management and Economics, Tianjin University, Tianjin 300072, China)

  • Han Gao

    (College of Management and Economics, Tianjin University, Tianjin 300072, China)

  • Xiao Zhang

    (College of Management and Economics, Tianjin University, Tianjin 300072, China)

  • Qinpeng Wang

    (School of Management Science and Engineering, Hebei University of Economics and Business, Shijiazhuang 050061, China)

  • Chenglin Hu

    (College of Intelligent Manufacturing, Tianjin Sino-German University of Applied Sciences, Tianjin 300350, China)

Abstract

Managing material and cash flows attracts concerns of physical and financial departments in most companies. We, therefore, focus on optimizing the replenishment policy for a channel with stock-dependent demand considering item deterioration and order backlogging under two financial schemes of progressive trade credit periods. We take both the continuous payment regime (CPR) and discrete payment regime (DPR) into account in the progressive trading process, which generates ten distinct scenarios. We show that the profit functions may not necessarily be concave and accordingly give a corresponding computing algorithm, which relaxes the convexity assumptions of objective functions in the existing literature and consequently enrich the research. We address the formulation characterization and the logic of pursuing global optimization from models arising in all settings. Computational studies and simulations are conducted to illustrate the effect of various parameters on the optimal replenishing policy and profit. Numerical experiments show that the CPR scheme is dominantly prior to DPR for long replenishment time intervals, whereas it is exactly the opposite for short time intervals. We also examine the impact of the shortage cost and deteriorating rate on optimum ordering policy and channel performance. Finally, future research directions are addressed in the end.

Suggested Citation

  • Longfei He & Han Gao & Xiao Zhang & Qinpeng Wang & Chenglin Hu, 2018. "Optimal Replenishment for Perishable Products with Inventory-Dependent Demand and Backlogging under Continuous and Discrete Progressive Payments," Sustainability, MDPI, vol. 10(10), pages 1-22, October.
  • Handle: RePEc:gam:jsusta:v:10:y:2018:i:10:p:3723-:d:176130
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/10/10/3723/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/10/10/3723/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Glock, C. H. & Schwindl, K. & Ries, J. M., 2014. "A note on: Optimal ordering policy for stock-dependent demand under progressive payment scheme," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 62253, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    2. Ray, J. & Chaudhuri, K. S., 1997. "An EOQ model with stock-dependent demand, shortage, inflation and time discounting," International Journal of Production Economics, Elsevier, vol. 53(2), pages 171-180, November.
    3. Srimathy Mohan & Gopalakrishnan Mohan & Ashok Chandrasekhar, 2008. "Multi-item, economic order quantity model with permissible delay in payments and a budget constraint," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 2(4), pages 446-460.
    4. Teng, Jinn-Tsair & Krommyda, Iris-Pandora & Skouri, Konstantina & Lou, Kuo-Ren, 2011. "A comprehensive extension of optimal ordering policy for stock-dependent demand under progressive payment scheme," European Journal of Operational Research, Elsevier, vol. 215(1), pages 97-104, November.
    5. Dye, Chung-Yuan, 2007. "Joint pricing and ordering policy for a deteriorating inventory with partial backlogging," Omega, Elsevier, vol. 35(2), pages 184-189, April.
    6. Goyal, Suresh Kumar & Teng, Jinn-Tsair & Chang, Chun-Tao, 2007. "Optimal ordering policies when the supplier provides a progressive interest scheme," European Journal of Operational Research, Elsevier, vol. 179(2), pages 404-413, June.
    7. Glock, Christoph H. & Ries, Jörg M. & Schwindl, Kurt, 2014. "A note on: Optimal ordering policy for stock-dependent demand under progressive payment scheme," European Journal of Operational Research, Elsevier, vol. 232(2), pages 423-426.
    8. Zhou, Yong-Wu & Zhong, Yuanguang & Li, Jicai, 2012. "An uncooperative order model for items with trade credit, inventory-dependent demand and limited displayed-shelf space," European Journal of Operational Research, Elsevier, vol. 223(1), pages 76-85.
    9. Ankit Prakash Tyagi & Rama Kant Pandey & Shivraj Singh, 2014. "An optimal replenishment policy for non-instantaneous deteriorating items with stock-dependent demand and variable holding cost," International Journal of Operational Research, Inderscience Enterprises Ltd, vol. 21(4), pages 466-488.
    10. Soni, Hardik & Shah, Nita H., 2008. "Optimal ordering policy for stock-dependent demand under progressive payment scheme," European Journal of Operational Research, Elsevier, vol. 184(1), pages 91-100, January.
    11. Li, Jun & Feng, Hairong & Zeng, Yinlian, 2014. "Inventory games with permissible delay in payments," European Journal of Operational Research, Elsevier, vol. 234(3), pages 694-700.
    12. Nabendu Sen & Sumit Saha, 2018. "An inventory model for deteriorating items with time dependent holding cost and shortages under permissible delay in payment," International Journal of Procurement Management, Inderscience Enterprises Ltd, vol. 11(4), pages 518-531.
    13. Manisha Pal & Anwesha Samanta, 2018. "Inventory model for non-instantaneous deteriorating item with random pre-deterioration period," International Journal of Inventory Research, Inderscience Enterprises Ltd, vol. 5(1), pages 3-12.
    14. Chung, Kun-Jen, 2009. "A note on optimal ordering policies when the supplier provides a progressive interest scheme," European Journal of Operational Research, Elsevier, vol. 199(2), pages 611-617, December.
    15. H.S. Shukla & R.P. Tripathi & Neha Sang, 2017. "EOQ Model with Stock-Level Dependent Demand and Different Holding Cost Functions," International Journal of Operations Research and Information Systems (IJORIS), IGI Global, vol. 8(4), pages 59-75, October.
    16. Vandana, & Sharma, B.K., 2016. "An EOQ model for retailers partial permissible delay in payment linked to order quantity with shortages," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 125(C), pages 99-112.
    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. Monalisha Tripathy & Geetanjali Sharma & Anuj Kumar Sharma, 2022. "An EOQ inventory model for non-instantaneous deteriorating item with constant demand under progressive financial trade credit facility," OPSEARCH, Springer;Operational Research Society of India, vol. 59(4), pages 1215-1243, December.
    2. Mingyuan Wei & Hao Guan & Yunhan Liu & Benhe Gao & Canrong Zhang, 2020. "Production, Replenishment and Inventory Policies for Perishable Products in a Two-Echelon Distribution Network," Sustainability, MDPI, vol. 12(11), pages 1-26, June.

    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. 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. Glock, Christoph H. & Ries, Jörg M. & Schwindl, Kurt, 2014. "A note on: Optimal ordering policy for stock-dependent demand under progressive payment scheme," European Journal of Operational Research, Elsevier, vol. 232(2), pages 423-426.
    3. Wang, Wan-Chih & Teng, Jinn-Tsair & Lou, Kuo-Ren, 2014. "Seller’s optimal credit period and cycle time in a supply chain for deteriorating items with maximum lifetime," European Journal of Operational Research, Elsevier, vol. 232(2), pages 315-321.
    4. R. Sundara rajan & R. Uthayakumar, 2017. "Comprehensive solution procedure for optimizing replenishment policies of instantaneous deteriorating items with stock-dependent demand under partial trade credit linked to order quantity," 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(2), pages 1343-1373, November.
    5. Teng, Jinn-Tsair & Lou, Kuo-Ren & Wang, Lu, 2014. "Optimal trade credit and lot size policies in economic production quantity models with learning curve production costs," International Journal of Production Economics, Elsevier, vol. 155(C), pages 318-323.
    6. 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.
    7. Borgonovo, E., 2010. "Sensitivity analysis with finite changes: An application to modified EOQ models," European Journal of Operational Research, Elsevier, vol. 200(1), pages 127-138, January.
    8. Chandra K. Jaggi & Mamta Gupta & Amrina Kausar & Sunil Tiwari, 2019. "Inventory and credit decisions for deteriorating items with displayed stock dependent demand in two-echelon supply chain using Stackelberg and Nash equilibrium solution," Annals of Operations Research, Springer, vol. 274(1), pages 309-329, March.
    9. Teng, Jinn-Tsair & Krommyda, Iris-Pandora & Skouri, Konstantina & Lou, Kuo-Ren, 2011. "A comprehensive extension of optimal ordering policy for stock-dependent demand under progressive payment scheme," European Journal of Operational Research, Elsevier, vol. 215(1), pages 97-104, November.
    10. Reza Maihami & Behrooz Karimi & Seyyed Mohammad Taghi Fatemi Ghomi, 2017. "Effect of two-echelon trade credit on pricing-inventory policy of non-instantaneous deteriorating products with probabilistic demand and deterioration functions," Annals of Operations Research, Springer, vol. 257(1), pages 237-273, October.
    11. Mu, Xiuqing & Kang, Kai & Zhang, Jing, 2022. "Dual-channel supply chain coordination considering credit sales competition," Applied Mathematics and Computation, Elsevier, vol. 434(C).
    12. Mohammad Reza Gholamian & Mahdi Ebrahimzadeh-Afruzi, 2021. "Credit and discount incentive options for two-level supply chain coordination, under uncertain price-dependent demand," Operational Research, Springer, vol. 21(4), pages 2283-2307, December.
    13. Zhou, Yong-Wu & Zhong, Yuanguang & Li, Jicai, 2012. "An uncooperative order model for items with trade credit, inventory-dependent demand and limited displayed-shelf space," European Journal of Operational Research, Elsevier, vol. 223(1), pages 76-85.
    14. 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.
    15. Guchhait, Partha & Kumar Maiti, Manas & Maiti, Manoranjan, 2013. "Production-inventory models for a damageable item with variable demands and inventory costs in an imperfect production process," International Journal of Production Economics, Elsevier, vol. 144(1), pages 180-188.
    16. Lihao Lu & Jianxiong Zhang & Wansheng Tang, 2016. "Optimal dynamic pricing and replenishment policy for perishable items with inventory-level-dependent demand," International Journal of Systems Science, Taylor & Francis Journals, vol. 47(6), pages 1480-1494, April.
    17. Ali Akbar Shaikh & Leopoldo Eduardo Cárdenas-Barrón & Amalesh Kumar Manna & Armando Céspedes-Mota & Gerardo Treviño-Garza, 2021. "Two Level Trade Credit Policy Approach in Inventory Model with Expiration Rate and Stock Dependent Demand under Nonzero Inventory and Partial Backlogged Shortages," Sustainability, MDPI, vol. 13(23), pages 1-19, December.
    18. Chaman Singh & Gurudatt Rao Ambedkar, 2023. "Optimizing EOQ model for expiring items with stock, selling cost and lifetime dependent demand under inflation," OPSEARCH, Springer;Operational Research Society of India, vol. 60(1), pages 174-187, March.
    19. 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.
    20. Chung, Kun-Jen, 2009. "A note on optimal ordering policies when the supplier provides a progressive interest scheme," European Journal of Operational Research, Elsevier, vol. 199(2), pages 611-617, December.

    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:gam:jsusta:v:10:y:2018:i:10:p:3723-:d:176130. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.