Optimal Replenishment for Perishable Products with Inventory-Dependent Demand and Backlogging under Continuous and Discrete Progressive Payments

Longfei He, Han Gao, Xiao Zhang, Qinpeng Wang and Chenglin Hu
Additional contact information
Longfei He: College of Management and Economics, Tianjin University, Tianjin 300072, China
Han Gao: College of Management and Economics, Tianjin University, Tianjin 300072, China
Xiao Zhang: College of Management and Economics, Tianjin University, Tianjin 300072, China
Qinpeng Wang: School of Management Science and Engineering, Hebei University of Economics and Business, Shijiazhuang 050061, China
Chenglin Hu: College of Intelligent Manufacturing, Tianjin Sino-German University of Applied Sciences, Tianjin 300350, China

Sustainability, 2018, vol. 10, issue 10, 1-22

Abstract: Managing material and cash flows attracts concerns of physical and financial departments in most companies. We, therefore, focus on optimizing the replenishment policy for a channel with stock-dependent demand considering item deterioration and order backlogging under two financial schemes of progressive trade credit periods. We take both the continuous payment regime (CPR) and discrete payment regime (DPR) into account in the progressive trading process, which generates ten distinct scenarios. We show that the profit functions may not necessarily be concave and accordingly give a corresponding computing algorithm, which relaxes the convexity assumptions of objective functions in the existing literature and consequently enrich the research. We address the formulation characterization and the logic of pursuing global optimization from models arising in all settings. Computational studies and simulations are conducted to illustrate the effect of various parameters on the optimal replenishing policy and profit. Numerical experiments show that the CPR scheme is dominantly prior to DPR for long replenishment time intervals, whereas it is exactly the opposite for short time intervals. We also examine the impact of the shortage cost and deteriorating rate on optimum ordering policy and channel performance. Finally, future research directions are addressed in the end.

Keywords: replenishing policy; stock-dependent demand; order backlogging; deterioration; progressive payments; operations optimization (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.mdpi.com/2071-1050/10/10/3723/pdf (application/pdf)
https://www.mdpi.com/2071-1050/10/10/3723/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:10:y:2018:i:10:p:3723-:d:176130

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().