A model for coordinating and joint optimisation of inventory and credit policies in an inventory system with date-terms credit linked demand
type: Item
instance of: scholarly article
title: A model for coordinating and joint optimisation of inventory and credit policies in an inventory system with date-terms credit linked demand
zbMATH Open document ID: 1362.90008
DOI: 10.1504/IJOR.2015.065940
author: K. K. Aggarwal
author: Arun Kumar Tyagi
published in: International Journal of Operational Research
publication date: 2017-05-31T00:00:00Z
review text: Summary: When firm gives credit period to its customers for generating credit sales in addition to cash sales, then it is quite possible that some of the cash customers would also take benefit of trade credit and buy on credit. Thus, decision of granting trade credit may have disintegrating effect on cash sales apart from stimulating new credit sales. Moreover, credit policy through its impact on demand becomes the determinant of inventory policy, which is intended to meet that demand. Therefore, inventory and credit policies are interrelated which should be determined simultaneously in a systems perspective. In this paper, a mathematical model is developed in discounted cash flow (DCF) framework to jointly determine inventory and credit policies in the presence of stimulating as well as disintegrating effect of credit period on demand. Numerical example and sensitivity analysis are presented to illustrate effectiveness of the model and results are discussed.
Mathematics Subject Classification ID: 90B05
zbMATH DE Number: 6724830
zbMATH Keywords: inventory policy
zbMATH Keywords: trade credit
zbMATH Keywords: date-term credit
zbMATH Keywords: credit linked demand
zbMATH Keywords: discounted cash flow
zbMATH Keywords: DCF
zbMATH Keywords: management science
zbMATH Keywords: optimisation
zbMATH Keywords: coordination
zbMATH Keywords: credit policy
zbMATH Keywords: mathematical modelling
zbMATH Keywords: inventory modelling
MaRDI profile type: Publication
full work available at URL: ijor.2015.065940
OpenAlex ID: W2323376381
description: scientific article