Retailer’s Optimal Ordering Policies with Two Stage Credit Policies and Imperfect Quality

Abstract

Two levels of trade credits refers that the supplier provides to his/her retailer a permissible delay period (M) in paying for purchasing items and the retailer also in turn provides a permissible delay period (N,M > N) to his/her customer to stimulate his product demand. When lot received by retailer, it may be contain some imperfect quality of goods by the causes of non-ideal production process or other causes. So retailers perform a screening process to find the imperfect items and returned to the supplier immediately. Therefore, an attempt is made in this paper to develop the retailer’s optimal ordering policies in supply chain coordination with upstream and downstream trade credits and imperfect quality. The propose paper considers two cases N ≤ M and M≤ N that is more near to real world cases. Some numerical examples are used to be show validity of this paper.

Key words: Inventory; Imperfect items; Up-stream and down-stream trade credits and supply chain