Two-Level Credit Financing for Noninstantaneous Deterioration Items in a Supply Chain with Downstream Credit-Linked Demand
Trade credit financing is a useful tool in business today, which can be characterized as the agreement between supply chain members such as permissible delay in payments. In this study, we assume that the items have the property of noninstantaneous deterioration and the demand is a function of downs...
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| Format: | Article |
| Language: | English |
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Wiley
2013-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2013/917958 |
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| _version_ | 1832549471255265280 |
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| author | Yong He Hongfu Huang |
| author_facet | Yong He Hongfu Huang |
| author_sort | Yong He |
| collection | DOAJ |
| description | Trade credit financing is a useful tool in business today, which can be characterized as the agreement between supply chain members such as permissible delay in payments. In this study, we assume that the items have the property of noninstantaneous deterioration and the demand is a function of downstream credit. Then, an EOQ model for noninstantaneous deterioration is built based on the two-level financing policy. The purpose of this paper is to maximize the total average profit by determine the optimal downstream credit period, the optimal replenishment cycle length, and the optimal ordering quantity per cycle. Useful theorems are proposed to characterize the method of obtaining the optimal solutions. Based on the theorems, an algorithm is designed, and numerical tests and sensitive analysis are provided. Lastly, according to the sensitive analysis, managerial insights are proposed. |
| format | Article |
| id | doaj-art-c41cb915530840f991be4c4eb7d4fedc |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2013-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-c41cb915530840f991be4c4eb7d4fedc2025-02-03T06:11:21ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2013-01-01201310.1155/2013/917958917958Two-Level Credit Financing for Noninstantaneous Deterioration Items in a Supply Chain with Downstream Credit-Linked DemandYong He0Hongfu Huang1Institute of Systems Engineering, School of Economics and Management, Southeast University, Nanjing 210096, ChinaInstitute of Systems Engineering, School of Economics and Management, Southeast University, Nanjing 210096, ChinaTrade credit financing is a useful tool in business today, which can be characterized as the agreement between supply chain members such as permissible delay in payments. In this study, we assume that the items have the property of noninstantaneous deterioration and the demand is a function of downstream credit. Then, an EOQ model for noninstantaneous deterioration is built based on the two-level financing policy. The purpose of this paper is to maximize the total average profit by determine the optimal downstream credit period, the optimal replenishment cycle length, and the optimal ordering quantity per cycle. Useful theorems are proposed to characterize the method of obtaining the optimal solutions. Based on the theorems, an algorithm is designed, and numerical tests and sensitive analysis are provided. Lastly, according to the sensitive analysis, managerial insights are proposed.http://dx.doi.org/10.1155/2013/917958 |
| spellingShingle | Yong He Hongfu Huang Two-Level Credit Financing for Noninstantaneous Deterioration Items in a Supply Chain with Downstream Credit-Linked Demand Discrete Dynamics in Nature and Society |
| title | Two-Level Credit Financing for Noninstantaneous Deterioration Items in a Supply Chain with Downstream Credit-Linked Demand |
| title_full | Two-Level Credit Financing for Noninstantaneous Deterioration Items in a Supply Chain with Downstream Credit-Linked Demand |
| title_fullStr | Two-Level Credit Financing for Noninstantaneous Deterioration Items in a Supply Chain with Downstream Credit-Linked Demand |
| title_full_unstemmed | Two-Level Credit Financing for Noninstantaneous Deterioration Items in a Supply Chain with Downstream Credit-Linked Demand |
| title_short | Two-Level Credit Financing for Noninstantaneous Deterioration Items in a Supply Chain with Downstream Credit-Linked Demand |
| title_sort | two level credit financing for noninstantaneous deterioration items in a supply chain with downstream credit linked demand |
| url | http://dx.doi.org/10.1155/2013/917958 |
| work_keys_str_mv | AT yonghe twolevelcreditfinancingfornoninstantaneousdeteriorationitemsinasupplychainwithdownstreamcreditlinkeddemand AT hongfuhuang twolevelcreditfinancingfornoninstantaneousdeteriorationitemsinasupplychainwithdownstreamcreditlinkeddemand |