Integrated inventory models with two-level credit policy and a price negotiation scenario for price-sensitive stock-dependent demand

Abstract

In this research, the integrated inventory models are developed for price-sensitive stock- dependent demand and delay in payments are permissible. Two level trade credit police in the vendor-buyer and buyer-customer is considered. An easy-to-use solution algorithm is derived for the integrated models to determine the buyer's optimal pricing and ordering strategy. A negotiation scenario is incorporated to distribute the extra profit between the vendor and buyer. A numerical example and sensitivity analysis are given to validate the proposed models. It is observed that the total joint profit of the integrated system can increase even if the price discount is offered to the buyer in proposed models. © 2011 Growing Science Ltd. All rights reserved.