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Mathematical Problems in Engineering
Volume 2014, Article ID 649189, 11 pages
Research Article

Supply Chain Coordination for Fixed Lifetime Products with Permissible Delay in Payments

School of Economics and Management, Tongji University, Shanghai 200092, China

Received 12 February 2014; Revised 13 April 2014; Accepted 13 April 2014; Published 7 May 2014

Academic Editor: Ming Li

Copyright © 2014 Yongrui Duan et al. 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.


This paper considers a two-level supply chain coordination problem for fixed lifetime products with permissible delay in payments. Two cases are discussed; that is, the retailer is required to settle the balance before the end of the ordering cycle (Case I) and after the ordering cycle (Case II). The coordination models are proposed and analyzed, respectively. The analytical methods as to how to determine the optimal policy are presented. In addition, it is indicated that the supplier's cost as well as that of the total system will be reduced no matter how much the parameters change, and the retailer will benefit from coordination, if the supplier is willing to share the cost saving with him/her in Case I. In Case II, the retailer's average cost will be reduced and the supplier will benefit from coordination only under certain conditions. Besides, the results show that, for fixed lifetime products, providing longer credit period than the retailer's order period is not commonly applicable.