A production and inventory model for deteriorating items with two-level partial trade credit and stochastic demand in a supply chain
ISSN: 0368-492X
Article publication date: 28 June 2022
Issue publication date: 9 November 2023
Abstract
Purpose
The purpose of this paper is to maximize the average profit of the supply chain by calculating the order quantity, the number of shipments during the production time of the vendor, the number of shipments during the supply cycle of the vendor and the time when the retailer’s inventory level reaches to zero.
Design/methodology/approach
A production and inventory model for degrading commodities with stochastic demand and two-level partial trade credit in a supply chain is presented. The model’s applicability and the processes' feasibility for solving are verified by GAMS software with BARON.
Findings
The impact of the model’s parameters on the vendor and retailer’s average profit was found through sensitivity analysis. The effect of the model’s parameters on the supply chain’s average profit was also found. Moreover, the reasons for this effect were given.
Practical implications
First, decision-makers may use this model to increase the supply chain's average profit. Second, the proposed model takes a general form. Third, the policymakers can also adjust the model’s parameters according to their preferences to get the desired results.
Originality/value
First, this paper develops an inventory and production model for perishable goods. Second, it is believed that the demand is random because the demand is affected by many factors, which make the study more realistic. Third, this paper studies production and inventory problems from the supply chain perspective. Finally, the interest for partial trade credit is calculated. The interest caused by stochastic shortages is also considered and calculated.
Keywords
Acknowledgements
This work was supported by National Natural Science Foundation of China (grant number 72061017, 71863021, 12071250, 71662019). The authors would like to thank the anonymous reviewers and the editor for their insightful comments and suggestions.
Citation
Dai, Z. and Wang, Y. (2023), "A production and inventory model for deteriorating items with two-level partial trade credit and stochastic demand in a supply chain", Kybernetes, Vol. 52 No. 11, pp. 4846-4875. https://doi.org/10.1108/K-02-2022-0188
Publisher
:Emerald Publishing Limited
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