Optimal order quantity with endogenous discounted partial advance payment and trade-credit for inventory model with linear time varying demand
type: Item
instance of: scholarly article
title: Optimal order quantity with endogenous discounted partial advance payment and trade-credit for inventory model with linear time varying demand
zbMATH Open document ID: 1486.90005
DOI: 10.1504/IJMOR.2021.120104
author: Swati Agrawal
author: Snigdha Banerjee
author: Rajesh K. Gupta
published in: International Journal of Mathematics in Operational Research
publication date: 2022-03-14T00:00:00Z
review text: Summary: When buyers seek extended credit periods from relatively less secure suppliers, the supplier requires co-operation from the buyer for purchase of raw materials, etc., in terms of partial advance payment. For a single buyer single supplier supply chain, we develop an inventory model with a hybrid payment policy combining discounted advance payment to supplier with the supplier permitting interest free delay period to the buyer when buyer has the option to make advance payment. For the advance, supplier offers discount and may allow the buyer to set the discount rate and the advance proportion. For a linear demand function in such a scenario, we maximise buyer's net profit rate through optimal choice of payment policy and the buyer's replenishment. We consider two situations with discount: 1) exogenous; 2) endogenous for the buyer. Optimal solution is characterised theoretically. Numerical example reveals that by choosing advance proportion appropriately, the profit rate in the endogenous case can be higher than that in the exogenous case even with lower discount.
Mathematics Subject Classification ID: 90B05
zbMATH DE Number: 7488832
zbMATH Keywords: inventory
zbMATH Keywords: supply chain
zbMATH Keywords: endogenous discount
zbMATH Keywords: advance payment
zbMATH Keywords: credit period
zbMATH Keywords: linear time dependent demand rate
MaRDI profile type: Publication
full work available at URL: ijmor.2021.120104
OpenAlex ID: W4285545400
description: scientific article; zbMATH DE number 7488832