Optimal inventory policy with noninstantaneous receipt under trade credit

In the last two decades, the models for inventory replenishment policies under trade credit have been widely studied by several researchers. However, the extant papers only consider the effects of permissible delay in payments in the inventory systems. In some situations, the supplier also may offer...

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Bibliographic Details
Published inInternational journal of production economics Vol. 98; no. 3; pp. 290 - 300
Main Authors Ouyang, Liang-Yuh, Teng, Jinn-Tsair, Chuang, Kai-Wayne, Chuang, Bor-Ren
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 18.12.2005
Elsevier
Elsevier Sequoia S.A
SeriesInternational Journal of Production Economics
Subjects
Cash discount
Delay in payments
Inventory
Inventory management
Noninstantaneous receipt
Order quantity
Payments
Strategic management
Studies
Supply chains
Europe
Cash discount
Inventory
Noninstantaneous receipt
Delay in payments
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Summary:In the last two decades, the models for inventory replenishment policies under trade credit have been widely studied by several researchers. However, the extant papers only consider the effects of permissible delay in payments in the inventory systems. In some situations, the supplier also may offer a cash discount to encourage retailer to pay for his purchases quickly. On the other hand, an inventory model with instantaneous receipt is not a common feature in actual practice. For generality, this study develops an inventory model with noninstantaneous receipt under trade credit, in which the supplier provides not only a permissible delay but also a cash discount to the retailer. We then characterize the optimal solution and provide an easy-to-use criterion to find the optimal order strategies. Finally, several numerical examples are presented to illustrate the theoretical results.
ISSN:0925-5273
1873-7579
DOI:10.1016/j.ijpe.2004.06.053