IDEAS home Printed from https://ideas.repec.org/a/ids/ijores/v22y2015i1p65-90.html
   My bibliography  Save this article

A model for coordinating and joint optimisation of inventory and credit policies in an inventory system with date-terms credit linked demand

Author

Listed:
  • K.K. Aggarwal
  • Arun Kumar Tyagi

Abstract

When firm gives credit period to its customers for generating credit sales in addition to cash sales, then it is quite possible that some of the cash customers would also take benefit of trade credit and buy on credit. Thus, decision of granting trade credit may have disintegrating effect on cash sales apart from stimulating new credit sales. Moreover, credit policy through its impact on demand becomes the determinant of inventory policy, which is intended to meet that demand. Therefore, inventory and credit policies are interrelated which should be determined simultaneously in a systems perspective. In this paper, a mathematical model is developed in discounted cash flow (DCF) framework to jointly determine inventory and credit policies in the presence of stimulating as well as disintegrating effect of credit period on demand. Numerical example and sensitivity analysis are presented to illustrate effectiveness of the model and results are discussed.

Suggested Citation

  • K.K. Aggarwal & Arun Kumar Tyagi, 2015. "A model for coordinating and joint optimisation of inventory and credit policies in an inventory system with date-terms credit linked demand," International Journal of Operational Research, Inderscience Enterprises Ltd, vol. 22(1), pages 65-90.
    • Handle: RePEc:ids:ijores:v:22:y:2015:i:1:p:65-90
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=65940
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

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

    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:ids:ijores:v:22:y:2015:i:1:p:65-90. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=170 .

    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.