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Discrete Dynamics in Nature and Society
Volume 2014, Article ID 839418, 18 pages
http://dx.doi.org/10.1155/2014/839418
Research Article

The Optimal Replenishment Policy under Trade Credit Financing with Ramp Type Demand and Demand Dependent Production Rate

1Business School, Tianjin University of Finance and Economics, Tianjin 300222, China
2College of Management and Economics, Tianjin University, Tianjin 300222, China

Received 28 February 2014; Accepted 12 May 2014; Published 19 June 2014

Academic Editor: Xiang Li

Copyright © 2014 Juanjuan Qin and Weihua Liu. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This paper investigates the optimal replenishment policy for the retailer with the ramp type demand and demand dependent production rate involving the trade credit financing, which is not reported in the literatures. First, the two inventory models are developed under the above situation. Second, the algorithms are given to optimize the replenishment cycle time and the order quantity for the retailer. Finally, the numerical examples are carried out to illustrate the optimal solutions and the sensitivity analysis is performed. The results show that if the value of production rate is small, the retailer will lower the frequency of putting the orders to cut down the order cost; if the production rate is high, the demand dependent production rate has no effect on the optimal decisions. When the trade credit is less than the growth stage time, the retailer will shorten the replenishment cycle; when it is larger than the breakpoint of the demand, within the maturity stage of the products, the trade credit has no effect on the optimal order cycle and the optimal order quantity.