Optimal credit period and lot size for deteriorating items with expiration dates under two-level trade credit financing

doi:10.1016/j.ejor.2014.03.009

機構典藏 > College of Business and Management > Department of Management Sciences > Journal Article > Item 987654321/97945

Please use this identifier to cite or link to this item: https://tkuir.lib.tku.edu.tw/dspace/handle/987654321/97945

Title:	Optimal credit period and lot size for deteriorating items with expiration dates under two-level trade credit financing
Authors:	Wu, Jiang;Ouyang, Liang-Yuh;Leopoldo Eduardo Cárdenas-Barrón;Suresh Kumar Goyal
Contributors:	淡江大學管理科學學系
Keywords:	Supply chain management;Deteriorating items;Expiration dates;Trade credit;Inventory
Date:	2014-03-15
Issue Date:	2014-05-08 16:06:13 (UTC+8)
Publisher:	Amsterdam: Elsevier BV * North-Holland
Abstract:	In a supplier-retailer-buyer supply chain, the supplier frequently offers the retailer a trade credit of S periods, and the retailer in turn provides a trade credit of R periods to her/his buyer to stimulate sales and reduce inventory. From the seller’s perspective, granting trade credit increases sales and revenue but also increases opportunity cost (i.e., the capital opportunity loss during credit period) and default risk (i.e., the percentage that the buyer will not be able to pay off her/his debt obligations). Hence, how to determine credit period is increasingly recognized as an important strategy to increase seller’s profitability. Also, many products such as fruits, vegetables, high-tech products, pharmaceuticals, and volatile liquids not only deteriorate continuously due to evaporation, obsolescence and spoilage but also have their expiration dates. However, only a few researchers take the expiration date of a deteriorating item into consideration. This paper proposes an economic order quantity model for the retailer where: (a) the supplier provides an up-stream trade credit and the retailer also offers a down-stream trade credit, (b) the retailer’s down-stream trade credit to the buyer not only increases sales and revenue but also opportunity cost and default risk, and (c) deteriorating items not only deteriorate continuously but also have their expiration dates. We then show that the retailer’s optimal credit period and cycle time not only exist but also are unique. Furthermore, we discuss several special cases including for non-deteriorating items. Finally, we run some numerical examples to illustrate the problem and provide managerial insights.
Relation:	European Journal of Operational Research 237(3), pp.898-908
DOI:	10.1016/j.ejor.2014.03.009
Appears in Collections:	[Department of Management Sciences] Journal Article

Files in This Item:

File	Description	Size	Format
index.html		0Kb	HTML	307	View/Open
Optimal credit period and lot size for deteriorating items with expiration dates under two-level trade credit financing.pdf		704Kb	Adobe PDF	47	View/Open

Loading...