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Retailer'S Inventory Policy And Supplier'S Delivery Policy Under Two-Level Trade Credit Strategy

Author

Listed:
  • CHIA-HSIEN SU

    (Graduate Institute of Management Sciences, Tamkang University, Tamsui, Taipei 251, Taiwan)

  • LIANG-YUH OUYANG

    (Department of Management Sciences and Decision Making, Tamkang University, Tamsui, Taipei 251, Taiwan)

  • CHIA-HUEI HO

    (Department of Computer Science and Information Engineering, Ming Chuan University, Gwei Shan, Taoyuan 333, Taiwan)

  • CHUN-TAO CHANG

    (Department of Statistics, Tamkang University, Tamsui, Taipei 251, Taiwan)

Abstract

This paper presents a stylized model to determine the optimal strategy for the integrated supplier-retailer inventory model under the condition that both the supplier and retailer have adopted a trade credit strategy. By analyzing the total channel profit function, we develop an algorithm to simultaneously determine the retailer's optimal order quantity and the number of shipment per production run from the supplier to the retailer. Our results demonstrate that the trade credit strategy is effective to supply chain system performance when customers are sensitive to the credit period length offered by the retailer. Moreover, when customers are sensitive to the credit period, if the retailer conveys partial advantage gained from the trade credit offered by the supplier to customers by suitably adjusting the customer's credit period then the entire system and every channel partner can benefit.

Suggested Citation

  • Chia-Hsien Su & Liang-Yuh Ouyang & Chia-Huei Ho & Chun-Tao Chang, 2007. "Retailer'S Inventory Policy And Supplier'S Delivery Policy Under Two-Level Trade Credit Strategy," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 24(05), pages 613-630.
    • Handle: RePEc:wsi:apjorx:v:24:y:2007:i:05:n:s0217595907001413
    DOI: 10.1142/S0217595907001413
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    Citations

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    Cited by:

    1. Tsao, Yu-Chung, 2017. "Managing default risk under trade credit: Who should implement Big-Data analytics in supply chains?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 106(C), pages 276-293.
    2. Johari, Maryam & Hosseini-Motlagh, Seyyed-Mahdi & Nematollahi, Mohammadreza & Goh, Mark & Ignatius, Joshua, 2018. "Bi-level credit period coordination for periodic review inventory system with price-credit dependent demand under time value of money," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 270-291.
    3. Gaurav Nagpal & Udayan Chanda & Himanshu Seth & Namita Ruparel, 2022. "Inventory Replenishment Policies for Two Successive Generations of Technology Products Under Permissible Delay in Payments," International Journal of Information Systems and Supply Chain Management (IJISSCM), IGI Global, vol. 15(1), pages 1-29, January.
    4. Juanjuan Qin & Aina Zhang & Liangjie Xia & Mengqi Liu, 2017. "Retail Order-Taking Strategies Under Competing Trade Credit Policies With Varying Demands," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(01), pages 1-17, February.
    5. Nita Shah, 2015. "Retailer’s replenishment and credit policies for deteriorating inventory under credit period-dependent demand and bad-debt loss," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 23(1), pages 298-312, April.
    6. Tsao, Yu-Chung, 2019. "Coordinating contracts under default risk control-based trade credit," International Journal of Production Economics, Elsevier, vol. 212(C), pages 168-175.
    7. Juanjuan Qin & Xiaojian Bai & Liangjie Xia, 2015. "Sustainable Trade Credit and Replenishment Policies under the Cap-And-Trade and Carbon Tax Regulations," Sustainability, MDPI, vol. 7(12), pages 1-22, December.
    8. Aditi Khanna & Aakanksha Kishore & Biswajit Sarkar & Chandra K. Jaggi, 2018. "Supply Chain with Customer-Based Two-Level Credit Policies under an Imperfect Quality Environment," Mathematics, MDPI, vol. 6(12), pages 1-35, December.

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