Research On Retailer’s Distribution Network Design And Ordering Decision Problems Under Trade Credit

In this paper, the author proposed a distribution network design andoperation decision model from retailer’s view considering trade credit.Retailer decides DCs’location and number in sales region while accountingfor integrated cost include DCs operation, ordering, distribution, inventorycost and capital interest getting in trade credit from the benefit of delay ofpayment, and makes optimal ordering period for minimal cost.We built two models separately for normal goods and fresh goods. Thenormal chain is a mix integer and non-linear function of retailer’s DCs’service area, DC’s number and replenishment cycle time.(Fresh chaincontains DC’s goods freshness keeping effort) After math reduction andalgorithm, we found normal chain’s objective cost function is a convexfunction on replenishment cycle time,(Fresh chain is about replenishmentcycle time and freshness keeping effort) and found that existing optimaldecision variables to realize minimal cost.With numerical examples and sensitivity analysis based on controllingvariants method, we researched the cost parameters influences on decisionvariables and optimal cost. By numerical examples and comparison modelsresults, we found there would same variance direction for decisionvariables in normal and fresh goods model under the same parameterchange rate. And there are not very apparent differences between normalgoods chain and fresh chain between DC’s location and service scales, andretailer’s replenishment cycle time. By building and solving comparisonmodels where trade credit was not involved, we found that retailer’s supply and distribution chain cost and operation decisions are affected a lot bytrade credit period. And if suppliers provide payment delay for retailer, theretailer would intend to shorten replenishment cycle time, reducedistribution centers’service area while adding some DCs.This model, research and algorithms we put forward could accuratelydetermine optimal distribution network design and operation decisions ofretailer under the certainty demand case. We also found trade credit’sinfluence on retailer’s network design and operation. And this work is notonly a base study for future researches on supply chain design under tradecredit, and also would give some instruction and inspirations for retailersand suppliers on network enlargement and building in business operation.