Paper Info
Title
Seller's optimal credit period and cycle time in a supply chain for deteriorating items with maximum lifetime.
Abstract
Due to evaporation, obsolescence, spoilage, etc., some products (e.g., fruits, vegetables, pharmaceuticals, volatile liquids, and others) not only deteriorate continuously but also have their expiration dates. To attract new buyers and increase sales, a seller frequently offers its buyers a trade credit period to settle the purchase amount. There is no interest charge to a buyer if the purchasing amount is paid within the credit period, and vice versa. On the other hand, granting a credit period from a seller to its buyers increases default risk. In this paper, we propose an economic order quantity model for a seller by incorporating the following relevant facts: (1) deteriorating products not only deteriorate continuously but also have their maximum lifetime, and (2) credit period increases not only demand but also default risk. We then characterize the seller’s optimal credit period and cycle time. Furthermore, we discuss a special case for non-deteriorating items. Finally, we run several numerical examples to illustrate the problem and provide some managerial insights.
Year
DOI
Venue
2014
10.1016/j.ejor.2013.06.027
European Journal of Operational Research
Keywords
DocType
Volume
Supply chain management,Inventory,Deteriorating items,Maximum lifetime,Trade credit
Journal
232
Issue
ISSN
Citations 
2
0377-2217
12
PageRank 
References 
Authors
0.64
18
3
Name
Order
Citations
PageRank
Wan-Chih Wang1120.98
Jinn-Tsair Teng260950.20
Kuo-Ren Lou3714.92