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Supply Chain Model with Stochastic Lead Time, Trade-Credit Financing, and Transportation Discounts

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  • Sung Jun Kim
  • Biswajit Sarkar

Abstract

This model extends a two-echelon supply chain model by considering the trade-credit policy, transportations discount to make a coordination mechanism between transportation discounts, trade-credit financing, number of shipments, quality improvement of products, and reduced setup cost in such a way that the total cost of the whole system can be reduced, where the supplier offers trade-credit-period to the buyer. For buyer, the backorder rate is considered as variable. There are two investments to reduce setup cost and to improve quality of products. The model assumes lead time-dependent backorder rate, where the lead time is stochastic in nature. By using the trade-credit policy, the model gives how the credit-period would be determined to achieve the win-win outcome. An iterative algorithm is designed to obtain the global optimum results. Numerical example and sensitivity analysis are given to illustrate the model.

Suggested Citation

  • Sung Jun Kim & Biswajit Sarkar, 2017. "Supply Chain Model with Stochastic Lead Time, Trade-Credit Financing, and Transportation Discounts," Mathematical Problems in Engineering, Hindawi, vol. 2017, pages 1-14, May.
    • Handle: RePEc:hin:jnlmpe:6465912
    DOI: 10.1155/2017/6465912
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    Cited by:

    1. Monami Das Roy & Shib Sankar Sana, 2021. "Inter-dependent lead-time and ordering cost reduction strategy: a supply chain model with quality control, lead-time dependent backorder and price-sensitive stochastic demand," OPSEARCH, Springer;Operational Research Society of India, vol. 58(3), pages 690-710, September.
    2. Bikash Koli Dey & Biswajit Sarkar & Sarla Pareek, 2019. "A Two-Echelon Supply Chain Management With Setup Time and Cost Reduction, Quality Improvement and Variable Production Rate," Mathematics, MDPI, vol. 7(4), pages 1-25, April.

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