Joint two-echelon inventory model for optimality of cycle time and inventory decisions with finite production rate under credit period

Abstract

In the universal competition of business environment, to face the global challenges around the business, it has turn into more traditional of giving trade credit by the vendor to the buyer as part of improving the sales revenue. The buyer need not to pay the vendor immediately whenever buyer received the goods, if a vendor offers credit period to the buyer. In this scenario focusing on the entire supply chain (SC) performance in terms of cycle time, inventory levels, number of shipment and the overall variable cost of the entire SC is essential. Mathematical models are developed for the joint two-echelon inventory system by assuming that production rate is finite. The present work aims to illustrate the optimality of cycle time, levels of inventory, number of shipments and the overall variable cost of the SC under the phenomena of credit period. Finally, numerical examples are solved to illustrate the theoretical results and also the sensitivity analysis is carried out.