Supply chain coordination for minimisation of total cost with credit period approach

Supply chain coordination has gained considerable notice lately from both practitioners and researchers. This paper develops a model for illustrating how to use credit period to achieve supply chain coordination. A single vendor and a single buyer in a two‐echelon supply chain are considered. The proposed model focuses on a centralised decision in the supply chain. We discuss how the credit period is to be determined in order to achieve channel coordination and a win win outcome. Coordination can be achieved only in this case where both parties get a cost lower than the one in the case without coordination. The proposed model can improve the global system performance and its cost efficiency. Also, numerical examples are solved to show the efficiency of the proposed model.