Profit optimisation for deteriorating products with price and stock-based demand with partial credit policy

Santosh Shekhawat and Kalpna Sharma

International Journal of Mathematics in Operational Research, 2025, vol. 32, issue 3, 390-425

Abstract: In this paper, a retailer centred supply chain is studied, and profit models developed under partial credit policy for deteriorating inventories. Two cases are considered for 'upstream and downstream' partial credit period of payments, and these cases are divided into five sub-cases based on cycle length and allowable delay period. Demand is function of price and stock, and holding cost is a nonlinear function of stock level. The cycle length and price are decision variables that maximise profit. Maximum profit has been observed when deadline for payment provided by the first party to the second party is greater than the deadline for payment provided by the second party to third-party. In this case, the second party may earn revenue by banking their earning. Therefore, partial deadline is more beneficial as it provides better cash flow and maximum profit. This study is applicable on supplier-retailer-costumer supply chain with partial trade credit policy and price-stock dependent demand.

Keywords: deterioration; price-stock based demand; profit-optimisation; credit period. (search for similar items in EconPapers)
Date: 2025
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