Article: Efficient production and financial management model considering customised products with a two-tier trade credit policy Journal: International Journal of Advanced Operations Management (IJAOM) 2025 Vol.16 No.4 pp.464 - 482 Abstract: Producing stock only when orders are received can significantly reduce wastages and costs associated with excessive inventory. Therefore, the paper examines the inventory model of customised products to mitigate the risk of overproduction. Additionally, the study investigates a two-tier partial trade credit policy, where the supplier offers a specific time to pay off. In contrast, the retailer provides a permissible delay in payment to customers. By considering factors like credit risk, interest rates, and customer relationships, the research aims to identify the optimal balance delaying payment to suppliers and maintaining a healthy cash flow. Employing the classical optimisation method, the paper determines the most advantageous trade-off, enabling businesses to optimise their financial strategies. The study uses a model that considers customised products and a two-tier trade credit policy to minimise the total cost while acknowledging permitted delay as a decision variable. The findings presented herein offer valuable insights for enterprises seeking to streamline production processes. A numerical investigation suggests that reducing permitted delays beyond cycle length improves cash flow management by enabling businesses to function less on credit, lowering interest and other expenses. Inderscience Publishers - linking academia, business and industry through research

Title: Efficient production and financial management model considering customised products with a two-tier trade credit policy

Authors: Anshika Singh; Abhinav Goel

Addresses: Department of Mathematics, IILM University, Greater Noida, Uttar Pradesh, 201306, India ' Graphic Era (Deemed to be) University, Dehradun, 248001, India

Abstract: Producing stock only when orders are received can significantly reduce wastages and costs associated with excessive inventory. Therefore, the paper examines the inventory model of customised products to mitigate the risk of overproduction. Additionally, the study investigates a two-tier partial trade credit policy, where the supplier offers a specific time to pay off. In contrast, the retailer provides a permissible delay in payment to customers. By considering factors like credit risk, interest rates, and customer relationships, the research aims to identify the optimal balance delaying payment to suppliers and maintaining a healthy cash flow. Employing the classical optimisation method, the paper determines the most advantageous trade-off, enabling businesses to optimise their financial strategies. The study uses a model that considers customised products and a two-tier trade credit policy to minimise the total cost while acknowledging permitted delay as a decision variable. The findings presented herein offer valuable insights for enterprises seeking to streamline production processes. A numerical investigation suggests that reducing permitted delays beyond cycle length improves cash flow management by enabling businesses to function less on credit, lowering interest and other expenses.

Keywords: customised products; two-tier trade credit policy; permissible delay; sustainability; production model; inventory management; supply chain; optimisation; interest rate.

DOI: 10.1504/IJAOM.2025.150025

International Journal of Advanced Operations Management, 2025 Vol.16 No.4, pp.464 - 482

Received: 22 Nov 2024
Accepted: 06 Aug 2025
Published online: 21 Nov 2025 *

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Title: Efficient production and financial management model considering customised products with a two-tier trade credit policy

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