The optimal retailer's ordering policies for deteriorating items with limited storage capacity under trade credit financing

The optimal retailer's ordering policies for deteriorating items with limited storage capacity under trade credit financing

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Article ID: iaor20072720
Country: Netherlands
Volume: 106
Issue: 1
Start Page Number: 127
End Page Number: 145
Publication Date: Jan 2007
Journal: International Journal of Production Economics
Authors: ,
Keywords: deteriorating items, Permissible delay in payments, economic order
Abstract:

Under permissible delay in payments, all previously published models implicitly assumed that the supplier would offer the retailer a delay period, but the retailer would not offer the trade credit period to his/her customer. Huang developed a retailer's replenishment model to reflect the real-life situations by assuming that the retailer also adopts the trade credit policy to stimulate his/her customer demand. In Huang's model, it is assumed that the goods are not perishable and the storage capacity is unlimited. Based upon the above argument, we propose a two-warehouse inventory model for deteriorating items under permissible delay in payments. Three theorems are developed to determine the optimal cycle time and numerical examples are given to illustrate these theorems. Finally, the results in this paper generalize the results presented by Huang.

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