The optimal investment in FMCG distribution process with continuous delay of payment

L. Antony Michaelraj and P. Shahabudeen

International Journal of Logistics Economics and Globalisation, 2007, vol. 1, issue 1, 34-48

Abstract: Due to globalisation, the FMCG distributors in the developing countries are struggling to capture and retain their market share from the multinational companies. To attract the retailers, the distributors supply on credit and collect the amount in unequal weekly instalments. When the supply on credit becomes inevitable, the distributors have to find out ways of optimising the investment. Moreover, the investment has to be shared among the retailers depending on their demand and payment policy, to maximise the sales and minimise the balance payment. This paper proposes a model for FMCG distribution on credit supply in the developing countries. Genetic Algorithm (GA) is employed to obtain the optimal amount of investment required and to search for the optimal replenishment policy to each retailer based on his demand and payment policy. A case of biscuits and confectionery products distribution is taken for study and the results are compared with the existing system.

Keywords: supply chain management; SCM; replenishment policy; fast moving consumer goods; FMCG distribution; vendor managed inventory; VMI; genetic algorithms; GA; globalisation; developing countries; credit supply; investment optimisation; continuous delay; payment delay; biscuits distribution; confectionery products. (search for similar items in EconPapers)
Date: 2007
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