An economic order quantity model under two-level partial trade credit for time varying deteriorating items

ABSTRACT

In general, supplier/retailer frequently offers trade credit to its credit-risk downstream member in order to stimulate their respective sales. This trade credit may either be full or partial, depending upon the past profile of downstream members. Partial trade credit may be offered by supplier/retailer to their credit-risk downstream member who must pay a portion of the purchase amount at the time of placing an order and then receives a permissible delay on the rest of the outstanding amount to avoid non-payment risks. In addition, many products deteriorate continuously and cannot be sold after their expiration dates. In this paper, a supplier–retailer–customer chain system is developed in which supplier, as well as retailer, offers partial trade credit to the subsequent credit-risk downstream member; deterioration rate is non-decreasing over time and near 100% particularly close to its expiration date, and demand rate is a credit period-dependent and default risk is incorporated. This paper demonstrates that the retailer's optimal credit period and replenishment time not only exist, but also are unique. We commit that our proposed model is a general theoretical model of the many previous models. Lastly, via numerical examples, sensitivity analysis illustrates the influence of key model parameters.

KEYWORDS:

• Inventory
• two-level partial trade credit
• supply chain management
• deteriorating items
• expiration dates

Acknowledgments

The authors would like to thank anonymous referees and the Editor-in-Chief for their positive and constructive comments to improve the previous version of this paper.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Puspita Mahata

Puspita Mahata is an Assistant Professor in the Department of Commerce, Srikrishna College, Bagula, Nadia, West Bengal, India. She received her B.Com. and M.Com. from Vidyasagar University, Midnapore, West Bengal, India. Her research interest focuses on Inventory Control/Management and Supply Chain Management. She has published in journals such as Mathematical and Computer Modelling, International Journal of Operational Research, International Journal of Strategic Decision Sciences, International Journal of Management Science and Engineering Management, Journal of Industrial Engineering International, etc.

Gour Chandra Mahata

Dr. Gour Chandra Mahata is an Associate Professor in the Department of Mathematics, Dum Dum Motijheel College, 1, Motijheel Avenue, Kolkata – 700074, West Bengal, India. He received his B.Sc. and M.Sc. degree from Vidyasagar University, Midnapore, West Bengal, India. He received his Ph.D. degree in Inventory Control/Management, Operations Research from Indian Institute of Technology, Kharagpur, India. His research interest focuses on Inventory Control/Management, Fuzzy Inventory Control, Supply Chain Management, and Optimization Theory. He has published in journals such as Computer and Mathematics with applications, Mathematical and Computer Modelling, Expert Systems with Applications, Computer and Industrial Engineering, Journal of Intelligent Manufacturing, Journal of Fuzzy Mathematics, Production Planning and Control, International Journal of Operational Research, International Journal of Mathematics in Operational Research, OPSEARCH, International Journal of Industrial Engineering Computations, Journal of Mathematical Modelling and Algorithms, International Journal of Strategic Decision Sciences, International Journal of Management Science and Engineering Management, Journal of Industrial Engineering International, etc.

Sujit Kumar De

Sujit Kumar De received his M.Sc. degree from Vidyasagar University in the year 1995 and joined as a lecturer in Mathematics at Panskura Banamali College, Purba Medinipur, West Bengal, India in the year 2000. He started his research work since 1998 at Vidyasagar University and received PhD degree in 2007. He also received M.Ed. degree from the University of Calcutta in the year 2008. His research interests are inventory control/ optimization, supply chain management under fuzzy, intuitionistic fuzzy, hesitant fuzzy, deterministic and stochastic environment. Currently, he is an Associate Professor and Head of the Department of in Mathematics at Midnapore College (Autonomous). He is the reviewer of more than 30 international journals. He has published more than 50 articles in the journals like Opsearch, International Journal of Fuzzy Systems and Rough Systems, International Journal of Systems Science, Journal of Applied Mathematics and Computing, Economic Modelling, Annals of Operations Research, Annals of Pure and Applied Mathematics, International Journal of Applied Mathematics and Computation, Journal of Computational Mathematics, Journal of Industrial Engineering, Pacific Science Review, Man and Life, International Journal of Management Sciences and Engineering Management, Int. J. of Systems Science, International Journal of Systems Science: Operations & Logistics, International Journal of Intelligent Manufacturing, International Journal of Intelligent & Fuzzy systems, Neurtosophic Sets and Systems , Int. J. of Systems Science & Control Engineering, Journal of Cleaner Production, Int. J. of Intelligent Computing and Cybernetics, etc.