Abstract
In practice, the supplier usually offers the retailer the permissible delay in payment, and the retailer in turn provides the trade credit period to his/her customers. In this paper, we assume that (1) the supplier asks the retailer to pay some cash when the order is delivered and then offer a short-term interest-free loan on the remaining purchasing cost. (2) The retailer offers a short-term interest-free loan to the customer. We then establish an appropriate inventory model for the perishable product to find the optimal cycle time and the fraction of no shortages such that the total profit is maximized. Finally, we present several mathematical models for different cases to illustrate the managerial insight.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
References
Bakker, M., Riezebos, J., Teunter, R.H.: Review of inventory systems with deterioration since 2001. Eur. J. Oper. Res. 221(2), 275–284 (2012)
Cambini, A., Martein, L.: Generalized Convexity and Optimization: Theory and Application. Springer, Heidelberg (2009)
Cárdenas-Barrón, L.E., Chung, K.J., Treviño-Garza, G.: Celebrating a century of the economic order quantity model in honor of Ford Whitman Harris. Int. J. Prod. Econ. 155, 1–7 (2014)
Chen, S.-C., Cárdenas-Barrón, L.E., Teng, J.T.: Retailer’s economic order quantity when the supplier offers conditionally permissible delay in payments link to order quantity. Int. J. Prod. Econ. 155, 284–291 (2014)
Chen, S.C., Teng, J.T.: Retailer’s optimal ordering policy for deteriorating items with maximum lifetime under supplier’s trade credit financing. Appl. Math. Model. 38(15–16), 4049–4061 (2014)
Chen, S.C., Teng, J.T.: Inventory and credit decisions for time-varying deteriorating items with up-stream and down-stream trade credit financing by discounted cash-flow analysis. Eur. J. Oper. Res. 243(2), 566–575 (2015)
Covert, R.B., Philip, G.S.: An EOQ model for items with Weibull distribution deterioration. AIIE Trans. 5(4), 323–326 (1973)
Dave, U., Patel, L.K.: (T, Si) policy inventory model for deteriorating items with time proportional demand. J. Oper. Res. Soc. 32(2), 137–142 (1981)
Dye, C.Y.: The effect of preservation technology investment on a non-instantaneous deteriorating inventory model. Omega 41(5), 872–880 (2013)
Dye, C.Y., Yang, C.T.: Sustainable trade credit and replenishment decisions with credit-linked demand under carbon emission constraints. Eur. J. Oper. Res. 244(1), 187–200 (2015)
Ghare, P.M., Schrader, G.P.: A model for an exponentially decaying inventory. J. Ind. Eng. 14(5), 238–243 (1963)
Goyal, S.K.: Economic order quantity under conditions of permissible delay in payments. J. Oper. Res. Soc. 36(4), 335–338 (1985)
Goyal, S.K., Giri, B.C.: Recent trends in modeling of deteriorating inventory. Eur. J. Oper. Res. 134(1), 1–16 (2001)
Grubbstrom, R.W.: A principle for determining the correct capital costs of work-in-progress and inventory. Int. J. Prod. Res. 18(2), 259–271 (1980)
Harris, F.W.: How many parts to make at once. Factory Mag. Manag. 10(2), 135–136, 152 (1913)
Huang, Y.F.: Optimal retailer’s ordering policies in the EOQ model under trade credit financing. J. Oper. Res. Soc. 54(9), 1011–1015 (2003)
Ouyang, L.Y., Chang, C.T.: Optimal production lot with imperfect production process under permissible delay in payments and complete backlogging. Int. J. Prod. Econ. 144(2), 610–617 (2013)
Ouyang, L.Y., Yang, C.T., Chan, Y.L., Cárdenas-Barrón, L.E.: A comprehensive extension of the optimal replenishment decisions under two levels of trade credit policy depending on the order quantity. Appl. Math. Comput. 224, 268–277 (2013)
Pahl, J., Voß, S.: Integrating deterioration and lifetime constraints in production and supply chain planning: a survey. Eur. J. Oper. Res. 238(3), 654–674 (2014)
Raafat, F.: Survey of literature on continuously deteriorating inventory model. J. Oper. Res. Soc. 42(1), 27–37 (1991)
Sarkar, B., Saren, S., Cárdenas-Barrón, L.E.: An inventory model with trade-credit policy and variable deterioration for fixed lifetime products. Ann. Oper. Res. 229(1), 677–702 (2015)
Seifert, D., Seifert, R.W., Protopappa-Sieke, M.: A review of trade credit literature: opportunity for research in operations. Eur. J. Oper. Res. 231(2), 245–256 (2013)
Shah, N.H., Cárdenas-Barrón, L.E.: Retailer’s decision for ordering and credit policies for deteriorating items when a supplier offers order-linked credit period or cash discount. Appl. Math. Comput. 259, 569–578 (2015)
Teng, J.T.: On the economic order quantity under conditions of permissible delay in payments. J. Oper. Res. Soc. 53(8), 915–918 (2002)
Teng, J.T.: Optimal ordering policies for a retailer who offers distinct trade credits to its good and bad credit customers. Int. J. Prod. Econ. 119(2), 415–423 (2009)
Teng, J.T., Chang, H.J., Dye, C.Y., Hung, C.H.: An optimal replenishment policy for deteriorating items with time-varying demand and partial backlogging. Oper. Res. Lett. 30(6), 387–393 (2002)
Teng, J.T., Chern, M.S., Yang, H.L., Wang, Y.J.: Deterministic lot-size inventory models with shortages and deterioration for fluctuating demand. Oper. Res. Lett. 24(1–2), 65–72 (1999)
Teng, J.T., Min, J., Pan, Q.: Economic order quantity model with trade credit financing for non-decreasing demand. Omega 40(3), 328–335 (2012)
Wang, W.C., Teng, J.T., Lou, K.R.: Seller’s optimal credit period and cycle time in a supply chain for deteriorating items with maximum lifetime. Eur. J. Oper. Res. 232(2), 315–321 (2014)
Wu, J., Ouyang, L.Y., Cárdenas-Barrón, L.E., Goyal, S.K.: Optimal credit period and lot size for deteriorating items with expiration dates under two-level trade credit financing. Eur. J. Oper. Res. 237(3), 898–908 (2014a)
Wu, J., Skouri, K., Teng, J.T., Ouyang, L.Y.: A note on “optimal replenishment policies for non-instantaneous deteriorating items with price and stock sensitive demand under permissible delay in payment”. Int. J. Prod. Econ. 155, 324–329 (2014b)
Wu, J., Teng, J.T., Chan, Y.L.: Inventory policies for perishable products with expiration dates and advance-cash-credit payment schemes. Int. J. Syst. Sci. Oper. Logist. 2017, 1–17 (2017)
Zhang, Q., Tsao, Y.C., Chen, T.H.: Economic order quantity under advance payment. Appl. Math. Model. 38(24), 5910–5921 (2014)
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2021 Springer Nature Switzerland AG
About this paper
Cite this paper
Chan, YL., Hsu, SM., Liao, MH. (2021). An Inventory Model for Perishable Items Under Upstream and Downstream Trade Credit. In: Barolli, L., Poniszewska-Maranda, A., Park, H. (eds) Innovative Mobile and Internet Services in Ubiquitous Computing . IMIS 2020. Advances in Intelligent Systems and Computing, vol 1195. Springer, Cham. https://doi.org/10.1007/978-3-030-50399-4_54
Download citation
DOI: https://doi.org/10.1007/978-3-030-50399-4_54
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-030-50398-7
Online ISBN: 978-3-030-50399-4
eBook Packages: Intelligent Technologies and RoboticsIntelligent Technologies and Robotics (R0)