Open AccessTwo – Warehouse Inventory System Model for Deteriorating Items Considering Partial Upstream Trade Credit Financing
Author(s) -
Z. H. Aliyu,
B. M. Sani
Publication year - 2021
Publication title -
asian research journal of mathematics
Language(s) - English
Resource type - Journals
ISSN - 2456-477X
DOI - 10.9734/arjom/2021/v17i1130342
Subject(s) - trade credit , business , database transaction , payment , upstream (networking) , warehouse , letter of credit , transaction cost , credit risk , finance , database , computer science , marketing , computer network , commercial bank
In this study, we developed an inventory system model under two – level trade credit where the supplier considers the retailer as credit risk but the retailer considers the customers as credit worthy. Therefore, the retailer is given a trade credit period on proportion of the goods ordered whenever he/she pays for proportion of the goods immediately after delivery. In the same vein, the retailer passes the same grace to the customers but without attaching any condition as the customers are assumed credit worthy. This partial upstream trade credit is offered to reduce the risk of failure in payment on the business transaction especially that most retailers are involved in bulk orders. The relevant cost functions are determined and a numerical example is given. Sensitivity analysis was carried out to see the effect of changes in parameters on the optimal solution of the model.