Line-of-Credit Payment Scheme and Its Impact on the Retailer’s Ordering Policy with Inventory-Level-Dependent Demand
Joint Authors
He, Zhengwen
Wang, Nengmin
Lin, Feng
Jia, Tao
Source
Mathematical Problems in Engineering
Issue
Vol. 2016, Issue 2016 (31 Dec. 2016), pp.1-17, 17 p.
Publisher
Hindawi Publishing Corporation
Publication Date
2016-09-20
Country of Publication
Egypt
No. of Pages
17
Main Subjects
Abstract EN
Practically, the supplier frequently offers the retailer credit period to stimulate his/her ordering quantity.
However, such credit-period-only policy may lead to the dilemma that the supplier’s account receivable increases with sale volume during delay period, especially for the item with inventory-level-dependent demand.
Thus, a line-of-credit (LOC) payment scheme is usually adopted by the supplier for better controlling account receivables.
In this paper, the two-parameter LOC clause is firstly applied to develop an economic order quantity (EOQ) model with inventory-level-dependent demand, aiming to explore its influences on the retailer’s ordering policy.
Under this new policy, the retailer will be granted full delay payment if his/her order quantity is below a predetermined quantity.
Otherwise, the retailer should make immediate payment for the excess part.
After analyzing the relationships among parameters, two distinct cases and several theoretical results can be derived.
From numerical examples, two incentives, a longer credit period and a lower rate of the retailer’s capital opportunity cost, should account for the retailer’s excessive ordering policy.
And a well-designed LOC clause can be applied to induce the retailer to place an appropriate ordering quantity and ensure the supplier maintains a reasonable account receivable.
American Psychological Association (APA)
Jia, Tao& Lin, Feng& He, Zhengwen& Wang, Nengmin. 2016. Line-of-Credit Payment Scheme and Its Impact on the Retailer’s Ordering Policy with Inventory-Level-Dependent Demand. Mathematical Problems in Engineering،Vol. 2016, no. 2016, pp.1-17.
https://search.emarefa.net/detail/BIM-1112132
Modern Language Association (MLA)
Jia, Tao…[et al.]. Line-of-Credit Payment Scheme and Its Impact on the Retailer’s Ordering Policy with Inventory-Level-Dependent Demand. Mathematical Problems in Engineering No. 2016 (2016), pp.1-17.
https://search.emarefa.net/detail/BIM-1112132
American Medical Association (AMA)
Jia, Tao& Lin, Feng& He, Zhengwen& Wang, Nengmin. Line-of-Credit Payment Scheme and Its Impact on the Retailer’s Ordering Policy with Inventory-Level-Dependent Demand. Mathematical Problems in Engineering. 2016. Vol. 2016, no. 2016, pp.1-17.
https://search.emarefa.net/detail/BIM-1112132
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references
Record ID
BIM-1112132