The Inventory Strategy For Exponentially Deteriorating Items Under Two-Level Trade Credit In Supply Chain

Inventory management is one of the most important part of logistics management. The cost of inventory management usually occupy most of the capital of a film. The development of a film is always affected by the huge cost due to inventory. In practice, products in inventory often show some phenomena with time, such as damage, decay, evaporation and the like. The products with these phenomena are called deteriorating items. Each year, our country will lose several of billions as result of deteriorating. So how to decrease the cost brought by inventory is the major problem should be considered by films.Trade credit as a financial method is the key factor influencing the order amount of the enterprises as well as their inventory cost. The main purpose of this paper is to investigate the optimal manufacturer's replenishment decisions for deteriorating items and study the effect of trade credit on inventory cost under supply chain management.The research object of this paper is a simple supply chain consist of a supplier, a manufacturer and a retailer. This paper will study the relationship between trade credit and inventory cost. In this system, the supplier offers the manufacturer a permissible delay period M, and simultaneously the manufacturer in turn provides the partial trade credit N to retailer. In this paper we model and analyse the manufacturer's inventory system under two assumptions, M>N and N<M. We discuss the influence of key model parameters under the supply chain on the manufacturer's inventory cost.In this paper, according to whether manufacturer offers a constant trade credit or not we divide the problem into two situations, we compare the cost of the two situations and find a conclusion:Under the background of supply chain credit payment, when the demand of retailer is related to trade credit offered by manufacturers, if the manufacturer offer different trade credit service with the change of markets will get a lower cost than offer a constant trade credit service.We study the influence of trade credit on inventory cost for deteriorating items, and this research offer some corresponding methods for films in inventory decision.