Optimisation of pricing and ordering under the two-stage credit policy for deteriorating items when the end demand is price and credit period sensitive Online publication date: Tue, 29-Dec-2009
by Nita H. Shah
International Journal of Business Performance and Supply Chain Modelling (IJBPSCM), Vol. 1, No. 2/3, 2009
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.
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