Deteriorating inventory model with advance-cash-credit payment schemes and partial backlogging

• Published in: Soft computing (Berlin, Germany) Vol. 29; no. 4; pp. 2279 - 2295
• Main Authors: Chang, Chun-Tao, Cheng, Mei-Chuan, Ouyang, Liang-Yuh
• Format: Journal Article
• Language: English
• Published: Berlin/Heidelberg Springer Berlin Heidelberg 01.02.2025; Springer Nature B.V
• Subjects: Application of Soft Computing; Artificial Intelligence; Computational Intelligence; Consumers; Control; Costs; Credit policy; Customers; Decision making; Engineering; Inventory; Inventory control; Manufacturers; Mathematical Logic and Foundations; Mathematical models; Mechatronics; Order quantity; Prepayments; Profits; Purchasing; Retail stores; Robotics; Sensitivity analysis; Shortages; Suppliers; Supply chains; Partial backlogging; Perishable goods; Economic order quantity; Advance-cash-credit payment
• ISSN: 1432-7643; 1433-7479
• DOI: 10.1007/s00500-025-10532-z

In business transactions, suppliers often ask retailers for advance-cash-credit (ACC) payments, and retailers offer customers a cash-credit (CC) payment plan. An advance payment is generally requested to avoid order cancellation, while a credit payment serves as an efficient approach to stimulate sales. With supply chains being usually subject to inventory shortages in view of various uncertainties, this study explores an optimal inventory policy for perishable goods with partial backlogging considerations when suppliers adopt an ACC payment plan for retailers and retailers offer customers a CC payment plan. For this purpose, we establish a model based on two theorems and provide an easy-to-use method to derive the optimal ordering policy to maximize retailers’ total profits. This solution is illustrated using numerical examples. Finally, we conduct a sensitivity analysis to examine the influence of changes in the values of key parameters on the optimal solution.