Retailer’s decision for ordering and credit policies for deteriorating items when a supplier offers order-linked credit period or cash discount

Abstract

In this study, the retailer’s decision for ordering and credit policies is analyzed when a supplier offers its retailer either a cash discount or a fixed credit period if the order quantity is greater than or equal to regular order policy. Then the retailer offers credit period to its customer which increases the demand and default risk and decreases profit. Furthermore, the units in the retailer’s inventory system deteriorate at a constant rate. Some theoretical results are derived to compute the optimal solution. The theoretical results are supported by numerical examples. The managerial acumens are provided.