RETAILER'S INVENTORY POLICY AND SUPPLIER'S DELIVERY POLICY UNDER TWO-LEVEL TRADE CREDIT STRATEGY

Chia-Hsien Su, Liang-Yuh Ouyang, Chia-Huei Ho () and Chun-Tao Chang
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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

Asia-Pacific Journal of Operational Research (APJOR), 2007, vol. 24, issue 05, 613-630

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.

Keywords: Inventory; trade credit; integrated model; production; shipment (search for similar items in EconPapers)
Date: 2007
References: View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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DOI: 10.1142/S0217595907001413

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