Study On Optimal Inventory Policies For Deteriorating Items Based On Trade Credit

As it is well known, long lead-times, short sales period, low salvage value and volatile markets etc characterize deteriorating items. In order to guarantee the effective configuration of corps resources and gain more profit based on limited capital input, meanwhile risks reducing, trade credit policy emerges in view of the obvious characteristics. The vendors supply certain trade credit period for the retailers, and permissible delay in payments, but also the retailers need not pay the interest under the trade credit period. The trade credit policy for deteriorating items in favor of reducing the risks, realize the optimal allocation of the resources, help the vendors cover up the price discrimination effectively. It can make the vendor understand better the condition of the credit of the retailers, accelerate the turnover rate of inventory for deteriorating items. Therefore, it can play an important part in the promoting economic development and social energy saving.Trade credit can increase sales volume for the vendors, and meanwhile make them undertake certain bad debts and the default risks. The retailers can enjoy the returns on opportunity investment which trade credit policy causes, and meanwhile they should undertake the capital loss which the mount of the deteriorating items because of the increasing order quantity. The research extends the content of the inventory optimization and supply chain coordination. The research results have important economic significance in the inventory optimization for deteriorating items and effectively allocation of the capital. They have the practical significance in the saving of the limited social energy.Based on former research, the paper researches optimal inventory model and related problems of trade credit for deteriorating items when the vendors supply trade credit for the retailers furthermore. The research contents of the dissertation can be concluded as follows:1) Firstly, the paper outlines the related foreign research work, and generalizes the inventory models in classification analysis, such as demand rate, deteriorating rate, out of stock or not, inflation, multi-inventory, and so on. Then, it summarizes the problems of trade credit, and analyses and compares the research statue on trade credit at domestic and overseas. It summarizes the current problems on research, and points out feasible research directions.2) The paper discusses the inventory theory for deteriorating items and related problems of trade credit. And it analyses the deficiency and improvement on trade credit qualitatively. It summarizes and analyses various deficiency of trade credit and points out its risk in today's business environments.3) The paper investigates the retailers' inventory policy by quantitative analysis When the retailers face trade credit afforded by vendors under different conditions if they want to maximize their profits (minimize their operation cost.). Based on the related research work, it studies the inventory models for deteriorating items respectively in view of the way of trade credit, such as fixed trade credit, trade credit based on the order quantity, based on the overall order quantity. And then, it makes sensitivity analysis on various parameters in reference of some calculation cases.