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Mathematical Problems in Engineering
Volume 2017 (2017), Article ID 6465912, 14 pages
Research Article

Supply Chain Model with Stochastic Lead Time, Trade-Credit Financing, and Transportation Discounts

Department of Industrial & Management Engineering, Hanyang University, Ansan, Gyeonggi-do 15588, Republic of Korea

Correspondence should be addressed to Biswajit Sarkar

Received 26 October 2016; Revised 22 January 2017; Accepted 14 February 2017; Published 18 May 2017

Academic Editor: Mohammad D. Aliyu

Copyright © 2017 Sung Jun Kim and Biswajit Sarkar. 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 model extends a two-echelon supply chain model by considering the trade-credit policy, transportations discount to make a coordination mechanism between transportation discounts, trade-credit financing, number of shipments, quality improvement of products, and reduced setup cost in such a way that the total cost of the whole system can be reduced, where the supplier offers trade-credit-period to the buyer. For buyer, the backorder rate is considered as variable. There are two investments to reduce setup cost and to improve quality of products. The model assumes lead time-dependent backorder rate, where the lead time is stochastic in nature. By using the trade-credit policy, the model gives how the credit-period would be determined to achieve the win-win outcome. An iterative algorithm is designed to obtain the global optimum results. Numerical example and sensitivity analysis are given to illustrate the model.