Retailer´s optimal ordering policy under two-part trade credit financing

The main purpose of this paper is to investigate the retailer´s ordering policy under trade credit offered by the supplier. The trade credit policy discussed in this paper is a two-part strategy, l.e. (β/M₁ n/M₂): cash discount and delayed payment. That is, if the buyer pays within M₁ the buyer receives a cash discount β; otherwise, the full purchasing price must be paid before M₂, where M₂ >;M₁≥0. In this paper, we assume that the retailer has the powerful decision-making right So, we extend the assumption that the retailer can pay any fraction of the purchase cost with time M₁ or M₂, Then, we investigate the retailer´s inventory system as a cost minimization problem to determine the retailer´s optimal ordering policy. Some easy-to-use theorems are developed to efficiently determine the optimal ordering policy for the retailer. We deduce some previously published results of other researchers as special cases. Finally, numerical examples are given to illustrate the theorems and obtain a lot of managerial phenomena.