Supply Chain Model with Stochastic Lead Time, Trade-Credit Financing, and Transportation Discounts

This model extends a two-echelon supply chain model by considering the trade-credit policy, transportations discount to make a coordination mechanism between transportation discounts, trade-credit financing, number of shipments, quality improvement of products, and reduced setup cost in such a way t...

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Bibliographic Details
Published in:Mathematical problems in engineering 2017-01, Vol.2017 (2017), p.1-14
Main Authors: Kim, Sung Jun, Sarkar, Biswajit
Format: Article
Language:English
Subjects:
Backorders
Cost analysis
Discounts
Financing
Inventory management
Iterative algorithms
Iterative methods
Lead time
Order quantity
Sensitivity analysis
Shipments
Supply chains
Time dependence
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Summary:This model extends a two-echelon supply chain model by considering the trade-credit policy, transportations discount to make a coordination mechanism between transportation discounts, trade-credit financing, number of shipments, quality improvement of products, and reduced setup cost in such a way that the total cost of the whole system can be reduced, where the supplier offers trade-credit-period to the buyer. For buyer, the backorder rate is considered as variable. There are two investments to reduce setup cost and to improve quality of products. The model assumes lead time-dependent backorder rate, where the lead time is stochastic in nature. By using the trade-credit policy, the model gives how the credit-period would be determined to achieve the win-win outcome. An iterative algorithm is designed to obtain the global optimum results. Numerical example and sensitivity analysis are given to illustrate the model.
ISSN:1024-123X
1563-5147
DOI:10.1155/2017/6465912