Bi-level credit period coordination for periodic review inventory system with price-credit dependent demand under time value of money

Abstract

A bi-level credit period coordination scheme is proposed for a supplier-retailer supply chain with a periodic review replenishment policy and price-credit dependent demand. The credit period offered by the retailer to its customers is a promotional effort to induce customer demand and gain market share. We model the problem under decentralized, centralized, and coordinated structures. Through the incentive scheme, the supplier seeks to increase the retailer's credit period by offering the retailer a credit period. Our results suggest that coordinating the inventory, pricing, and credit financing can improve the overall chain and individual member profitability. © 2018 Elsevier Ltd