Title: Optimisation of pricing and ordering under the two-stage credit policy for deteriorating items when the end demand is price and credit period sensitive

Authors: Nita H. Shah

Addresses: Department of Mathematics, Gujarat University, Ahmedabad – 380 009, Gujarat, India

Abstract: The supplier offers a credit period to the retailer for settling account against the purchases made. But this credit period is not passed by the retailer to the customer which is termed as one-stage credit policy. However, in business, the retailer offers credit period to his customers to stimulate their demand. Such a situation where both supplier as well as retailer offers the credit period to their respective customers is known as two-stage credit policy. In this research article, the demand of an item is assumed to be a function of credit period and sale price offered by the retailer to the customers. The units in inventory are subject to constant rate of deterioration. A flow-chart is given to decide the retailer|s optimal decision policy. The results have been validated by a numerical example.

Keywords: credit dependent demand; price dependent demand; two-stage credit policy; deterioration; pricing optimisation; ordering optimisation; flow charts.

DOI: 10.1504/IJBPSCM.2009.030643

International Journal of Business Performance and Supply Chain Modelling, 2009 Vol.1 No.2/3, pp.229 - 239

Published online: 29 Dec 2009 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article