Inventory policies with retailer’s flexible payment time and customer’s fixed credit time for manufacturer-retailer supply chain

Abstract

An inventory model with price sensitive and time dependent demand to obtain joint inventory policies for a manufacturer retailer supply chain is developed in this paper. Products in the system are considered to be deteriorated at a constant rate. Manufacturer adopts a lot-for-lot policy for delivering retailer’s demand and offers the retailer payment time dependent price for the product. Payment time dependent discount is offered to the retailer in case of advanced payment and payment time dependent higher product price is taken from retailer in case of delayed payment. Demand for retailer’s side is considered to be price sensitive as well as time dependent quadratic in nature. Retailer gives a fixed trade credit to the customers. Optimal production quantity, payment time for retailer, individual profit for retailer and manufacturer and joint profit of the supply chain are discussed.