A Production Lot-Size Model for Perishable Items Under Two Level Trade Credit Policy for a Retailer with a Powerful Position in a Supply Chain System

Abstract

This paper investigates a production lot-size inventory model for perishable items under two levels of trade credit for a retailer to reflect the supply chain management situation. We assume that the retailer maintains a powerful position and can obtain full trade credit offered by supplier yet retailer just offers the partial trade credit to customers. Under these conditions, retailer can obtain the most benefits. Then, we investigate the retailer's inventory policy as a cost minimization problem to determine the retailer's inventory policy. A rigorous mathematical analysis is used to prove that the annual total variable cost for the retailer is convex, that is, unique and global-optimal solution exists. Mathematical theorems are developed to efficiently determine the optimal ordering policies for the retailer. The results in this paper generalize some already published results. Finally, numerical examples are given to illustrate the theorems and obtain a lot of managerial phenomena.