Abstract
AbstractA supply chain of single manufacturer and single retailer is analyzed when units in warehouse are subject to deterioration at a constant rate. The demand is a decreasing function of selling price and increasing function of credit period offered by the retailer to the customers. Manufacturer follows a lot-for-lot production strategy. The manufacturer ensures delay payment to the retailer with agreement that the retailer will share a fraction of the profit realized during the credit period. The total joint profit of the supply chain is maximized with respect to replenishment time, selling price, and credit period. An algorithm is described to find the best strategy. Numerical examples are given to validate the proposed problem. Sensitivity analysis is carried out to examine important model parameters.
Highlights
The fact that the retailer must follow cash-on-delivery strategy is no more advocated in the business transactions
We study the impact of two-level trade credit policy on a supply chain comprising of a single-manufacturer and single-retailer
This study deals with two-level trade credit financing for two players of the supply chain viz. manufacturer and the retailer
Summary
The fact that the retailer must follow cash-on-delivery strategy is no more advocated in the business transactions. The manufacturer offers retailer a fixed credit period to boost the demand, and decrease his holding and deterioration cost. Giri and Maiti (2013) formulated model which considers that the retailer borrows loan from bank to settle the accounts and concluded that it is advantageous to do payment at the end of the allowable credit period This offer entices to order more frequently which reduces manufacturer’s inventory. He and Huang (2013) developed inventory model for two players of a supply chain for non-instantaneous deterioration items where demand is a function of downstream credit-linked demand. Chung, Cárdenas-Barrón, and Ting (2014) developed an inventory model with non-instantaneous receipt and exponentially deteriorating items for an integrated three layer supply chain system under two levels of trade credit when demand is constant. Notations and assumptions The proposed problem is formulated with following notations and assumptions
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