Retailer’s Optimal Payment Decisions for Price-dependent Demand under Partial Advance Payment and Trade Credit in Different Scenarios

Rajesh Gupta¹ , Snigdha Banerjee² , Swati Agrawal³

Section:Research Paper, Product Type: Isroset-Journal
Vol.5 , Issue.4 , pp.44-53, Aug-2018

CrossRef-DOI:   https://doi.org/10.26438/ijsrmss/v5i4.4453

Online published on Aug 31, 2018

Copyright © Rajesh Gupta, Snigdha Banerjee , Swati Agrawal . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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Abstract :
In this paper, we investigate retailer’s payment decisions in an EOQ framework for a supply chain system under trade credit and partial advance payment. Considering price-dependent demand, the model has been developed under three different scenarios. In Scenario I, the optimal length of the replenishment cycle is determined when the supplier specifies the discount factor for the advance payment to be made by the retailer and the retailer’s has a fixed mark-up. In Scenario II, retailer’s optimal selling price is determined for the fixed length of the replenishment cycle and discount factor specified by the supplier. In Scenario III, discount factor is optimally decided by the retailer for specified retailer’s selling price and the fixed length of the replenishment cycle. In all the three scenarios, the retailer’s payment has to be made at two different stages: partial advance payment at the time of placing the order prior to beginning of the selling season and the remaining dues have to be paid at the end of permitted trade credit period with an objective to maximize the retailer’s net profit. Numerical examples are presented. It is seen that the retailer’s net profit is maximum when the retailer can decide his selling price.

Key-Words / Index Term :
Inventory, supply chain, trade credit, discounted advance payment, price- dependent demand

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