Retailer's Optimal Credit and Replenishment Policy for Deteriorating Items Using A Flexible Credit Demand

Authors:

Chandra K. Jaggi (University of Delhi)

Amrina Kausar (University of Delhi)

Mona Verma (Maharaja Agrasen College)

Keywords: Deterioration, flexible credit-linked demand, Inventory, two level credit policy.

Abstract:

In today's highly competitive business environment, entrepreneurs are increasingly using different promotional strategies to attract more and more customers. One such strategy could he to offer trade credit to the customers, which not only plays a great role in increasing the market share but also the profit. However, its impact on demand has nal received due attention of the researchers. Practically, the length of the credit period offered by the supplier/ retailer has positive influence on the demand. The impact of credit period may be instant or delayed, which can be observed on the demand of many consumer durable products. Motivated from this fact, an inventory model has been developed for deteriorating items which determines the optimal replenishment as well as credit period for a retailer using a flexible credit linked demand function, which takes care of both the instant as well as delayed impact of the credit period on demand. The model has been validated with the help of numerical example followed by the comprehensive sensitivity analysis.