Research On Supply Chain Ordering Under Two Different Kinds Of Trade Credit

Trade credit has been widely used in the commodity trading, especially delay in payments has been used as competitive strategy by company. This paper mainly argues optimal ordering decision problem in supplier-retailer channel under two kinds of payments. First one is permissible delay in payments which the retailer must pay the good after a regular credit period; second one is centralized delay in payments which the retailer must pay the good in a regular credit date. The paper not only considers the determining of retailer’s ordering policy, but provides supplier’s policy under two different kinds of trade credit to offer some certain guiding significance. The paper mainly includes three aspects as following.(1) Build order cost function model based on the permissible delay in payments and centralized delay in payments from the retailer’s perspective. Get the optional ordering quantity, ordering cycle time and give numerical examples illustration, parameter sensitivity analysis(2) Build supplier cost function model and the solution algorithm based on the permissible delay in payments and centralized delay in payments to determine the length of credit period. It shows that supplier in lot-for-lot production has little influence on order quantity under permissible delay in payments. It also reveals that supplier cost reduces along with the growth of the credit period.(3) Comparing two kinds of trade credit from perspective of retailer and supplier, retailers tends to choose permissible delay in payments and supplier to centralized delay in payments, which provides a certain theoretical basis on the trade credit contract.