Credit policy for an inventory model of a deteriorating item having variable demand considering default risk

• Published in: Scientia Iranica. Transaction E, Industrial engineering Vol. 32; no. 4; pp. 1 - 13
• Main Authors: Mondal, Rituparna, Pramanik, Prasenjit, Jana, Ranjan Kumar, Maiti, Manas Kumar
• Format: Journal Article
• Language: English
• Published: Tehran Sharif University of Technology 01.08.2025
• Subjects: Algorithms; Credit policy; Credit risk; Customers; Default; Demand; Inventory; Inventory control; Investigations; Optimization; Order quantity; Profits; Retail stores; Risk; Search algorithms; Search process; Soft computing; Suppliers; Supply chains; Swarm intelligence
• DOI: 10.24200/sci.2022.56218.4607

In this study, a supplier-retailer-customer supply chain has been proposed for a deteriorating item with expiration time and dynamic deterioration rate. Here, the supplier adopt full credit policy for the retailer to enhance the retailer's order volume. This facility influences the retailer to provide some partial credit opportunity to the customers to boost the demand. For this credit policy, the retailer always faces a risk due to defaulters, which is termed as default credit risk. The default credit risk is considered in more realistic manner, which depends on the customers' partial credit period and credit amount. The market demand is influenced by customers' credit amount, customers' credit period and retail price of the item. Optimal decision is searched by maximizing the average profit of the system. For the search process, an artificial bee colony algorithm is implemented, tested and used. Illustration of the model is done with some hypothetical examples.