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Trade credit competition between two retailers in a supply chain under credit-linked retail price and market demand

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Abstract

The paper considers a supply chain system in which the sole manufacturer supplies the same product to two retailers who compete in offering trade credit period to customers. Both the market demand and retail prices vary with the trade credit periods offered by the retailers. The manufacturer also provides a trade credit period to both the retailers to settle down their accounts. The net profit function of the supply chain is derived considering possible relationships among the trade credit periods offered by the manufacturer and the retailers and the time when each retailer receives the last payment from his customer. An algorithm is developed to find the optimal solution of the proposed model. From the numerical study, it is observed that a two-level trade credit financing can increase profits not only for the manufacturer and the retailers but also for the whole supply chain.

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Acknowledgments

The authors are thankful to the anonymous reviewers for their valuable comments and suggestions that helped in improving the quality of the paper. The first author gratefully acknowledges the financial support provided by the University Grants Commission, New Delhi, under UGC-DRS Program 2012–2016.

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  1. Department of Mathematics, Jadavpur University, Kolkata, India

    B. C. Giri & T. Maiti

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  1. B. C. Giri
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  2. T. Maiti
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Correspondence to B. C. Giri.

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Giri, B.C., Maiti, T. Trade credit competition between two retailers in a supply chain under credit-linked retail price and market demand. Optim Lett 8, 2065–2085 (2014). https://doi.org/10.1007/s11590-013-0702-x

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  • DOI: https://doi.org/10.1007/s11590-013-0702-x

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