Advertisement

An Optimal Ordering Policy of the Retailers Under Partial Trade Credit Financing and Restricted Cycle Time in Supply Chain

  • Shin’ichi Yoshikawa
Conference paper

Abstract

The traditional EOQ (Economic Order Quantity) model assumes that retailers’ capitals are unrestricting and the retailer must pay for items as soon as the retailer receives them from suppliers. However, this may not be true. In practice, the supplier will offer the retailer a delay period. This period is known as the trade credit period. Previously published papers assumed that the supplier would offer the retailer a delay period and the retailer could sell goods and earn interest or investment within the trade credit period. They assumed that the supplier would offer the retailer a delay period but the retailer would not offer the trade credit period to his/her customer. We extend their model and construct new ordering policy. In this paper, the retailer will also adopt the partial trade credit policy to his/her customer. We assume that the retailer’s trade credit period offered by the supplier is not shorter than his/her customer’s trade credit period offered by the retailer. In addition, they assumed the relationship between the supplier and the retailer is one-to-one. One thing we want to emphasize here is that the supplier has cooperative relations with many retailers. Furthermore, we assume that the total of the cycle time is restricted. Under these conditions, we model the retailers’ inventory system to determine the optimal cycle times for n retailers.

Keywords

EOQ model Partial trade credit Supply chain 

References

  1. Chang HJ, Hung CH, Dye CY (2001) An inventory model for deteriorating items with linear trend demand under the condition of permissible delay in payment. Prod Plan Cont 12:274–282CrossRefGoogle Scholar
  2. Chen MS, Chuang CC (1999) An analysis of light buyer’s economic order model under trade credit. Asia Pacific J Opns Res 16:23–24zbMATHGoogle Scholar
  3. Huang YF, Hsu KF (2008) An EOQ model under retailer partial trade credit policy in supply chain. Inter J Prod Econ 112:655–864CrossRefGoogle Scholar
  4. Hwang H, Shinn SW (1997) Retailer’s pricing and lot sizing policy for exponentially deteriorating products under the condition of permissible delay in payment. Comp Opns Res 24:539–547zbMATHCrossRefGoogle Scholar
  5. Kim JS, Hwang H, Shinn SW (1995) An optimal credit policy to increase wholesaler’s profits with price dependent demand functions. Prod Plan Cont 6:45–50CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Singapore 2013

Authors and Affiliations

  1. 1.Nagoya Keizai UniversityInuyamaJapan

Personalised recommendations