Article: Retailer|s optimal credit and replenishment policy for deteriorating items with credit linked demand in a supply chain Journal: International Journal of Applied Decision Sciences (IJADS) 2010 Vol.3 No.2 pp.117 - 131 Abstract: It has been generally observed that the credit period has become a major concern for most of retailers, as it not only has direct influence on inventory and finance, but also on the demand of an item. Unfortunately, for deteriorating items, the impact of the credit period on demand has not received much attention in the literature, whereas in reality, the length of the credit period offered by the supplier/retailer has a positive impact on the demand rate. Furthermore, it is generally observed that at the initial stage the credit period may not be effective in realising the demand but as the credit period increases it has a significant impact on demand and gradually reaches its saturation level. In order to incorporate this phenomenon in a supply chain of a single supplier single retailer and multiple consumers, a credit-linked demand function has been considered to determine the optimal replenishment time as well as the credit period for a retailer. Using the theorem, the optimal replenishment policy for deteriorating items has been derived for the retailer. Finally, results have been validated with numerical examples followed by a sensitivity analysis. Inderscience Publishers - linking academia, business and industry through research

Title: Retailer's optimal credit and replenishment policy for deteriorating items with credit linked demand in a supply chain

Authors: Chandra K. Jaggi, Amrina Kausar

Addresses: Department of Operational Research, Faculty of Mathematical Sciences, New Academic Block, University of Delhi, Delhi-110007, India. ' Department of Operational Research, Faculty of Mathematical Sciences, New Academic Block, University of Delhi, Delhi-110007, India

Abstract: It has been generally observed that the credit period has become a major concern for most of retailers, as it not only has direct influence on inventory and finance, but also on the demand of an item. Unfortunately, for deteriorating items, the impact of the credit period on demand has not received much attention in the literature, whereas in reality, the length of the credit period offered by the supplier/retailer has a positive impact on the demand rate. Furthermore, it is generally observed that at the initial stage the credit period may not be effective in realising the demand but as the credit period increases it has a significant impact on demand and gradually reaches its saturation level. In order to incorporate this phenomenon in a supply chain of a single supplier single retailer and multiple consumers, a credit-linked demand function has been considered to determine the optimal replenishment time as well as the credit period for a retailer. Using the theorem, the optimal replenishment policy for deteriorating items has been derived for the retailer. Finally, results have been validated with numerical examples followed by a sensitivity analysis.

Keywords: inventory; credit-linked demand; payment delays; two level credit policies; deterioration; replenishment policy; deteriorating items; supply chain management; SCM; retailers.

DOI: 10.1504/IJADS.2010.034835

International Journal of Applied Decision Sciences, 2010 Vol.3 No.2, pp.117 - 131

Published online: 24 Aug 2010 *

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Title: Retailer's optimal credit and replenishment policy for deteriorating items with credit linked demand in a supply chain

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