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Integrated supplier-buyer cooperative models with price-dependent demand and process quality improvement under two-part trade credit policy

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  • Hsien-Jen Lin

Abstract

This paper deals with an integrated supplier-buyer inventory model with process quality improvement where market demand is sensitive to the retail price and the supplier adopts two-part trade credit policy. The model has some insights in order to obtain optimal strategy of a business firm. The objectives of this paper are twofold. Firstly, we want to correct and improve the recently studied model by simultaneously optimising order quantity, defective rate, retail price, and number of shipments from the supplier to the buyer to maximise the joint total profit. Secondly, we consider that the demand rate is retail price dependent and the production rate is finite and proportional to the demand rate to fit the real-life situations. For the proposed model, a computational algorithm is proposed for determining the optimal solution. Furthermore, numerical examples are provided to illustrate the modelling idea and effectiveness of the algorithm. Sensitivity analysis is conducted and some managerial implications are presented.

Suggested Citation

  • Hsien-Jen Lin, 2019. "Integrated supplier-buyer cooperative models with price-dependent demand and process quality improvement under two-part trade credit policy," International Journal of Industrial and Systems Engineering, Inderscience Enterprises Ltd, vol. 32(1), pages 120-135.
    • Handle: RePEc:ids:ijisen:v:32:y:2019:i:1:p:120-135
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    Cited by:

    1. Beatriz Abdul-Jalbar & Roberto Dorta-Guerra & José M. Gutiérrez & Joaquín Sicilia, 2021. "Production/Inventory Policies for a Two-Echelon System with Credit Period Incentives," Mathematics, MDPI, vol. 9(15), pages 1-25, July.

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