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Optimisation of pricing and ordering under the two-stage credit policy for deteriorating items when the end demand is price and credit period sensitive

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  • Nita H. Shah

Abstract

The supplier offers a credit period to the retailer for settling account against the purchases made. But this credit period is not passed by the retailer to the customer which is termed as one-stage credit policy. However, in business, the retailer offers credit period to his customers to stimulate their demand. Such a situation where both supplier as well as retailer offers the credit period to their respective customers is known as two-stage credit policy. In this research article, the demand of an item is assumed to be a function of credit period and sale price offered by the retailer to the customers. The units in inventory are subject to constant rate of deterioration. A flow-chart is given to decide the retailer's optimal decision policy. The results have been validated by a numerical example.

Suggested Citation

  • Nita H. Shah, 2009. "Optimisation of pricing and ordering under the two-stage credit policy for deteriorating items when the end demand is price and credit period sensitive," International Journal of Business Performance and Supply Chain Modelling, Inderscience Enterprises Ltd, vol. 1(2/3), pages 229-239.
    • Handle: RePEc:ids:ijbpsc:v:1:y:2009:i:2/3:p:229-239
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    Citations

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    Cited by:

    1. Wetzel, Philipp & Hofmann, Erik, 2019. "Supply chain finance, financial constraints and corporate performance: An explorative network analysis and future research agenda," International Journal of Production Economics, Elsevier, vol. 216(C), pages 364-383.
    2. Shah, Nita H. & Cárdenas-Barrón, Leopoldo Eduardo, 2015. "Retailer’s decision for ordering and credit policies for deteriorating items when a supplier offers order-linked credit period or cash discount," Applied Mathematics and Computation, Elsevier, vol. 259(C), pages 569-578.
    3. Abdul Basyith & Abid Djazuli & Fitriya Fauzi, 2021. "Does Working Capital Management Affect Profitability? Empirical Evidence from Indonesia Listed Firms," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(3), pages 236-251, March.
    4. Grzegorz Zimon, 2020. "Financial Liquidity Management Strategies in Polish Energy Companies," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 365-368.

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