Optimisation of pricing and ordering under the two-stage credit policy for deteriorating items when the end demand is price and credit period sensitive

Nita H. Shah

International Journal of Business Performance and Supply Chain Modelling, 2009, vol. 1, issue 2/3, 229-239

Abstract: The supplier offers a credit period to the retailer for settling account against the purchases made. But this credit period is not passed by the retailer to the customer which is termed as one-stage credit policy. However, in business, the retailer offers credit period to his customers to stimulate their demand. Such a situation where both supplier as well as retailer offers the credit period to their respective customers is known as two-stage credit policy. In this research article, the demand of an item is assumed to be a function of credit period and sale price offered by the retailer to the customers. The units in inventory are subject to constant rate of deterioration. A flow-chart is given to decide the retailer's optimal decision policy. The results have been validated by a numerical example.

Keywords: credit dependent demand; price dependent demand; two-stage credit policy; deterioration; pricing optimisation; ordering optimisation; flow charts. (search for similar items in EconPapers)
Date: 2009
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