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Three stage trade credit policy in a three-layer supply chain–a production-inventory model

Author

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  • Brojeswar Pal
  • Shib Sankar Sana
  • Kripasindhu Chaudhuri

Abstract

The main purpose of this paper is to investigate the optimal replenishment lot size of supplier and optimal production rate of manufacturer under three levels of trade credit policy for supplier–manufacturer–retailer supply chain. The supplier provides a fixed credit period to settle the accounts to the manufacturer, while the manufacturer gives a fixed credit period to settle the account to the retailer and the retailer, in turn, also offers a credit period to each of its customers to settle the accounts. We assume that the supplier supplies the raw material to the manufacturer and sends back the defective raw materials to the outside supplier after completion of inspection at one lot with a sales price. The system always produces good items in the model. Also, we consider the idle times of supplier and manufacturer. Finally, numerical examples are provided to illustrate the behaviour and application of the model with graphical simulation.

Suggested Citation

  • Brojeswar Pal & Shib Sankar Sana & Kripasindhu Chaudhuri, 2014. "Three stage trade credit policy in a three-layer supply chain–a production-inventory model," International Journal of Systems Science, Taylor & Francis Journals, vol. 45(9), pages 1844-1868, September.
    • Handle: RePEc:taf:tsysxx:v:45:y:2014:i:9:p:1844-1868
    DOI: 10.1080/00207721.2012.757383
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    Citations

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    Cited by:

    1. Fred Ojochide Peter & Adeshola Oluwaseyi Peter & Rasak Bamidele & Mubo M. Adeniyi & Ibrahim Adama & Lydia Harry Decster & Esther Ogundipe & Bunmi S. Adioti, 2022. "Trade credit management and SMEs sustainability: a study of selected SMEs in Lagos, Nigeria," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 13(4), pages 1834-1844, August.
    2. Xu, Xinhan & Chen, Xiangfeng & Jia, Fu & Brown, Steve & Gong, Yu & Xu, Yifan, 2018. "Supply chain finance: A systematic literature review and bibliometric analysis," International Journal of Production Economics, Elsevier, vol. 204(C), pages 160-173.
    3. Yan Shi & Zhiyong Zhang & Sunil Tiwari & Zhiwen Tao, 2022. "Retailer's optimal strategy for a perishable product with increasing demand under various payment schemes," Annals of Operations Research, Springer, vol. 315(2), pages 899-929, August.
    4. Leyla Aliabadi & Seyed Hessameddin Zegordi & Ali Husseinzadeh Kashan & Mohammad Ali Rastegar, 2024. "A sustainable supply chain model for time-varying deteriorating items under the promotional cost-sharing policy and three-level trade credit financing," Operational Research, Springer, vol. 24(2), pages 1-59, June.
    5. Waqas Ahmed & Muhammad Jalees & Muhammad Omair & Zainab Mukhtar & Muhammad Imran, 2022. "An inventory management for global supply chain through reworking of defective items having positive inventory level under multi-trade-credit-period," Annals of Operations Research, Springer, vol. 315(1), pages 1-28, August.
    6. Ruihai Li & Jinn-Tsair Teng & Yingfei Zheng, 2019. "Optimal credit term, order quantity and selling price for perishable products when demand depends on selling price, expiration date, and credit period," Annals of Operations Research, Springer, vol. 280(1), pages 377-405, September.

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