Optimal pricing and ordering policies for retailers under order-size-dependent delay in payments

Shinn, Seong Whan; Hwang, Hark

doi:10.1016/s0305-0548(01)00076-4

Cited by 164 publications

(59 citation statements)

References 9 publications

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“…If player is not in a position to settle the account in due course of time then some credit period can be offered to him but interest rate is higher in this new offer. Shinn and Hwang (2003) analyzed retailer's inventory policies under order-quantity dependent credit period for price-sensitive demand. Ouyang et al (2005) incorporated cash discount offer from seller and credit period to the retailer.…”

Section: Introductionmentioning

confidence: 99%

Retailer’s optimal policies for deteriorating items with a fixed lifetime under order-linked conditional trade credit

Shah¹

2017

10.5267/j.uscm

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The player uses credit financing to perform profitable business. We analyze an economic order quantity model in which items have a fixed lifetime and deteriorate over time. The supplier offers the retailer a full credit period whenever the retailer orders more than or equal to a prespecified quantity. If the retailer orders less than pre-specified order quantity, then the retailer will do partial payment to the supplier and avail of delay in payments for the remaining outstanding amount. The demand is price-sensitive. The retailer's profit is maximized by setting appropriate retail price and replenishment time. The algorithm is developed to choose the best policy for the decision maker from the number of alternatives. Numerical data is used to validate the theoretical developments. Managerial insights are discussed. It is observed that for a given units to qualify for avail of partial credit period, increase in ordering cost decreases profit of the retailer. The increase in rate of the purchase cost to avail of delay payment suggests that to have a more profit, retailer should deplete stock before the allowable credit period.Growing Science Ltd. All rights reserved. 7

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Section: Introductionmentioning

confidence: 99%

Retailer’s optimal policies for deteriorating items with a fixed lifetime under order-linked conditional trade credit

Shah¹

2017

10.5267/j.uscm

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“…Available results in this regard can be found in the work by Goyal [1,2], Monahan [3], Lee and Rosenblatt [4], Banerjee [5], Abad [6], Goyal and Gupta [7], Benjamin [8], Anupindi and Akella [9], Kohli and Park [10], Lau and Lau [11], Weng [12,13,14,15], Li and Huang [16], Corbett and Groote [17], Chen, Federgruen and Zheng [18], Cheung and Lee [19], Abad and Jaggi [20], Abad [21], Shinn and Hwang [22], and Viswanathan and Wang [23], etc. Among these studies, many assumed the market demand is price-sensitive and a decreasing function of the buyer (or retailer)'s selling price, which in turn depends on the supplier's selling price, trade credit offering, quantity or volume discount policies, or other incentive programs to the buyer.…”

Section: Introductionmentioning

confidence: 95%

“…The market demand, D(x), is assumed to be a commonly used decreasing convex function of buyer's selling price (x) or D(x)=d/x e (see Li and Huang [16], Shinn and Hwang [22], Abad and Jaggi [20], and Abad [21]), where 1 > e stands for the index of price elasticity and d>0 stands for the scaling factor. Under this assumption, we develop simple and close-form formulas to quantify the improvement on supply chain profitability that may be achieved by better cooperation and having the logistics partner to join the supply chain alliance.…”

Section: Introductionmentioning

confidence: 99%

Optimal business policies for a supplier–transporter–buyer channel with a price-sensitive demand

Lei

Wang

Fan

2006

Journal of the Operational Research Society

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Abstract.As the third party logistics partners (carriers) taking a more and more significant role in supply chain practices and customer service performance improvement, there is an emerging need for the studies on optimal channel coordination policies for business processes involving not only supplier and buyer, but also transportation partners. In this paper, we explicitly add a transportation partner with concave cost functions into the analysis for supplier-buyer channel coordination policies, and analyze the impact of coordination and pricing policies on supply chain profitability. The market demand (D(x)) is assumed to be a decreasing convex function of buyer's selling price (x), or D(x)=d/x e , where 1 > e stands for the index of price elasticity. Under this assumption, we quantify the improvement on total supply chain profitability when moving from a non-cooperative environment to a cooperative environment. Our result demonstrates the importance of the transporter's role in this collaboration. Using D(x)=d/x 2 as an example, we show that the joint annual profit of three partners in a fully cooperative environment can be at least twice of what may be achieved by three independently operated companies in a leader-follower business game. While in a real world business environment, a perfect collaboration is hard to achieve, this result can be used to provide a quick estimation on the upper bound on the budget for profit sharing among the supply chain partners or discount offers.

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“…Fewings (1992), Chu et al (1998) examined the economic ordering policy of deteriorating items under permissible delay in payments. Shinn and Hwang (2003) discussed optimal ordering policies under delay in payments. investigated inventory model for non-instantaneous deteriorating items with permissible delay in payments.…”

Section: Introduction and Literature Reviewmentioning

confidence: 99%

Optimal pricing and replenishment policies for instantaneous deteriorating items with backlogging and trade credit under inflation

Rajan¹,

Uthayakumar

2017

J Ind Eng Int

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In this paper we develop an economic order quantity model to investigate the optimal replenishment policies for instantaneous deteriorating items under inflation and trade credit. Demand rate is a linear function of selling price and decreases negative exponentially with time over a finite planning horizon. Shortages are allowed and partially backlogged. Under these conditions, we model the retailer's inventory system as a profit maximization problem to determine the optimal selling price, optimal order quantity and optimal replenishment time. An easy-to-use algorithm is developed to determine the optimal replenishment policies for the retailer. We also provide optimal present value of profit when shortages are completely backlogged as a special case. Numerical examples are presented to illustrate the algorithm provided to obtain optimal profit. And we also obtain managerial implications from numerical examples to substantiate our model. The results show that there is an improvement in total profit from complete backlogging rather than the items being partially backlogged.

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Optimal pricing and ordering policies for retailers under order-size-dependent delay in payments

Cited by 164 publications

References 9 publications

Retailer’s optimal policies for deteriorating items with a fixed lifetime under order-linked conditional trade credit

Retailer’s optimal policies for deteriorating items with a fixed lifetime under order-linked conditional trade credit

Optimal business policies for a supplier–transporter–buyer channel with a price-sensitive demand

Optimal pricing and replenishment policies for instantaneous deteriorating items with backlogging and trade credit under inflation

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