The integrated inventory model with the transportation cost and two-level trade credit in supply chain management

Abstract

This paper takes the transportation cost into account to develop the new supplier–retailer inventory model under the condition that both supplier and retailer have adopted the two-level trade credit policy. Moreover, this paper presents the integrated total profit per unit time Π(n,T) of two decision variables n (the number of shipments from supplier to retailer per production run, a positive integer) and T (retailer’s replenishment cycle length). The main purpose of this paper not only derives the closed-form formulations for the optimal solution (n∗,T∗) of Π(n,T) but also simplifies the algorithm to determine the optimal solution described by Su et al. (2007) [36]. Finally, numerical examples are used to compare with those by Su et al. (2007) [36].