Economic production quantity model with trade credit financing and price-discount offer for non-decreasing time varying demand pattern

Puspita Mahata and Gour Chandra Mahata

International Journal of Procurement Management, 2014, vol. 7, issue 5, 563-581

Abstract: As a policy when some suppliers offer trade credit periods and price discounts to the retailers in order to increase the demand of their product, the retailers have to face different types of offer of discounts and credits for which they have to take a decision which is the best offer for them for profit. One thing is important to the retailers that they try to buy good quality items at a reasonable price and if possible, they try to invest returns obtained by selling those items in such a manner that their business is not hampered. In this paper, we intend to develop an economic production quantity (EPQ)-based model with non-decreasing time varying (quadratic) demand pattern in order to investigate the inventory system as a profit maximisation problem when delay in payment and price discount are permitted by the suppliers to the retailers. Mathematical theorems are developed analytically to determine optimal replenishment policies and a lot of managerial phenomena are obtained through numerical examples.

Keywords: inventory policy; trade credit; time-quadratic demand; buyer-suppplier relationships; price discounting; increasing demand; retail industry; economic production quantity; EPQ; credit financing; time varying demand patterns; replenishment policy. (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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