Profit maximization multi-item inventory models considering trade credit and sales learning curve

Abstract

In this paper we consider a multi-item distribution channel subject to supplier’s credit period and retailer’s promotional effort with sales learning curve. We determine the retailer’s promotional effort for each item and the joint replenishment cycle in both decentralized and centralized decision models. We show that the profits for both parties increase under the centralized decision model when the credit period is kept within an appropriate range. The impacts of credit period and sales learning curve on the behavior of the channel are also discussed. We conclude with computation analyses that lead to a variety of management insights.