On optimal payment time for a retailer under permitted delay of payment by the wholesaler

On optimal payment time for a retailer under permitted delay of payment by the wholesaler

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Article ID: iaor2007548
Country: Netherlands
Volume: 103
Issue: 1
Start Page Number: 246
End Page Number: 251
Publication Date: Jan 2006
Journal: International Journal of Production Economics
Authors: ,
Keywords: supply & supply chains
Abstract:

Jamal et al. study a wholesaler–retailer supply chain where the retailer is given a permissible credit period to pay back the dues without paying any interest to the wholesaler. The problem is modeled as a cost minimization problem with two decision variables: the payment time P of the retailer and the length of the inventory cycle T. While the model represents, in general, an interesting problem, we show in this note that there are a number of nontrivial flaws contained in the development of their model and therefore the solution they derived is not correct. We give the correct model and derive the corresponding optimal solution.

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