Inventory model for optimal pricing and ordering policies under two-level trade credits

Abstract

In this article, an inventory problem with constant demand under the two-level trade financing is discussed in which supplier offers credit period M to retailer and retailer gives credit period N to his customers. The main focus of this paper is on to maximise the total profit per unit time of the retailer with respect to pricing and ordering. The problem with constant demand is discussed. The paper is divided in to two cases (Case 1: M ≥ N, Case 2: M ≤ N). A decision rule for the retailers is suggested to maximise the total profit per unit time. An attempt is made to develop a model when the supplier offers a fixed credit period to the retailer and retailer also offers credit period to the customers which is a more practical case in the market.