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http://dx.doi.org/10.17703/JCCT.2022.8.6.655

Sensitivity analysis on the length of credit period for an inventory model with stock dependent consumption rate  

Shinn, Seong-Whan (Dept. of Advanced Materials & Chemical Engineering, Halla Univ)
Publication Information
The Journal of the Convergence on Culture Technology / v.8, no.6, 2022 , pp. 655-660 More about this Journal
Abstract
This paper analyzes the problem of the economic order quantity (lot size) of a retailer in a two-stage supply chain consisting of a supplier, a retailer(distributor), and a customer. In this two-stage supply chain, the supplier permits the retailer to defer payment for a certain fixed period of time for the purchase cost to be paid by the retailer as a price differentiation strategy with his competitor. In addition, in the case of customer goods such as food and grain, it is common to see that end-customer demand is generally depend on the level of inventory displayed by the retailer. From this perspective, this paper analyzes the inventory problem of retailers under the assumption that the supplier may allow a certain period to suspend payments for the purchase of goods and the end customer demand is a function of the retailer's inventory level increasing with size. In this regard, we need to analyze how much the length of the grace period for product purchase costs affect the retailer's lot-sizing policy. Therefore, we formulate the retailer's annual net profit and analyze the effect of the length of credit period on the retailer's inventory policy numerically.
Keywords
Supply Chain; Credit Period; Sensitivity Analysis; Stock Dependent Demand; Lot-size;
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