Determining optimal retail price and lot size under day-terms supplier credit

Shinn, Seong Whan

doi:10.1016/s0360-8352(97)00230-1

Cited by 63 publications

(23 citation statements)

References 14 publications

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“…Due to significant practical relevance of trade credit policy, numerous inventory models under the condition of delay in payments have been discussed. The models of Goyal [16], Aggarwal and Jaggi [1], Shinn [38], Liao et al [28], Teng [42], Chung and Huang [12], Ouyang et al [35], Mahata and Goswami [29], Jaber [23], Sana and Chaudhuri [36], Chang et al [6], Balkhi [3], Teng et al [47], Min et al [34], Zhou and Zhou [54] are worth mentioning in this direction.…”

Section: Literature Reviewmentioning

confidence: 98%

Partial Trade Credit Policy of Retailer in Economic Order Quantity Models for Deteriorating Items with Expiration Dates and Price Sensitive Demand

Mahata¹

2015

J Math Model Algor

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In a supplier-retailer-customer supply chain, a credit-worthy retailer frequently receives a permissible delay on the entire purchase amount without collateral deposits from his/her supplier (i.e., an up-stream full trade credit). By contrast, a retailer usually requests his/her credit-risk customers to pay a fraction of the purchase amount at the time of placing an order, and then grants a permissible delay on the remaining balance (i.e., a down-stream partial trade credit). Also, in selecting an item for use, the selling price of that item is one of the decisive factors to the customers. It is well known that the higher selling price of item decreases the demand rate of that item where the lesser price has the reverse effect. Hence, the demand rate of an item is dependent on the selling price of that item. In addition, 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 to allow for: (a) the strategy that supplier offers retailer a full trade credit policy whereas the retailer offers their customers a partial trade credit policy, (b) selling price dependent demand rate, (c) a profit maximization objective and (d) deteriorating items not only deteriorate continuously but also have their expiration dates. For the objective function sufficient conditions for the existence and uniqueness of the optimal solution are provided. An efficient algorithm is designed to determine the optimal pricing and inventory policies for the retailer. Finally, numerical examples are presented to illustrate the proposed model and the effect of key parameters on optimal solution is examined.

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Section: Literature Reviewmentioning

confidence: 98%

Partial Trade Credit Policy of Retailer in Economic Order Quantity Models for Deteriorating Items with Expiration Dates and Price Sensitive Demand

Mahata¹

2015

J Math Model Algor

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“…The authors use an ascent search method and recommend multiple starting points because of the non-concavity of the objective. Also incorporating a constant elasticity demand function, Shinn (1997) and Hwang and Shinn (1997) seek to optimize the price and lot size when the supplier allows the buyer to delay payment for a fixed duration. Like advertising, such trade credit also stimulates demand, but unlike advertising, it does so by reducing the buyer's costs.…”

Section: Decaying and Perishable Inventorymentioning

confidence: 99%

Coordinated Pricing and Production/Procurement Decisions: A Review

Yano¹,

Gilbert²

International Series in Quantitative Marketing

139

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It has been nearly 50 years since researchers began to develop analytical models to aid in simultaneous decisions regarding pricing strategy, which influences demands, and production/procurement decisions, which determine the cost of satisfying those demands. In this chapter, we provide a comprehensive review of analytical models on this topic, focusing on models in which external demand is price-sensitive. We review models in both continuous and discrete-time frameworks, considering both constant and time-varying demand functions, with and without demand uncertainty. Although our emphasis is on decision problems facing a single firm, we also provide a brief overview of models involving multiple firms or multiple decision-makers. We also offer suggestions for future research.

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“…Recently, Chang et al [9], Dye and Ouyang [10], Ouyang et al [11], Shinn [12], and Teng et al [13] introduced the RPLS problem under trade credit when the customer's demand rate is represented by a constant price elasticity function of selling price. Also, Tsao and Sheen [14] extended the RPLS problem to the case of deteriorating products under trade credit.…”

Section: Introductionmentioning

confidence: 99%

Buyer’s Pricing and Lot-sizing Policy with Price Dependent Demand under Day terms Supplier Credit in a Two-Stage Supply Chain

Shinn¹

2017

AJMAHS

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As an effective means of price discrimination, some suppliers offer credit periods to the buyers in order to stimulate the demand for the product they produce. The availability of the credit period from the supplier enables the buyer to choose his selling price from a wider range of price option. Since the buyer's lot-size is affected by the customer's demand rate of the product, the problems of determining the selling price and the lot-size are interdependent and must be solved simultaneously. In this regard, this paper deals with the problem of determining the buyer's optimal selling price and lot-size simultaneously when the supplier permits delay in payments for an order of a product. The positive effects of credit period on the product demand can be integrated into the inventory model through the consideration of retailing situations, where the demand rate is a function of the selling price the buyer sets for the product. Thus, it is also assumed that the customer's demand rate is represented by a downward slopping linear function of the selling price. Investigation of the properties of an optimal solution allows us to develop an algorithm whose validity is illustrated using an example problem.

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Determining optimal retail price and lot size under day-terms supplier credit

Cited by 63 publications

References 14 publications

Partial Trade Credit Policy of Retailer in Economic Order Quantity Models for Deteriorating Items with Expiration Dates and Price Sensitive Demand

Partial Trade Credit Policy of Retailer in Economic Order Quantity Models for Deteriorating Items with Expiration Dates and Price Sensitive Demand

Coordinated Pricing and Production/Procurement Decisions: A Review

Buyer’s Pricing and Lot-sizing Policy with Price Dependent Demand under Day terms Supplier Credit in a Two-Stage Supply Chain

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