OPTIMAL DOWN – STREAM CREDIT PERIOD AND REPLENISHMENT TIME FOR DETERIORATING INVENTORY IN A SUPPLY CHAIN

In this paper, a supply chain comprising of three players viz. manufacturer, distributor and retailer is analyzed when demand depends upon the credit period offered by the distributor to the retailer. The units in inventory of each period are subject to deterioration at a constant rate. The manufacturer has finite production capacity and manufacturers proportional to the demand rate. The manufacturer offers credit period to the distributor. The total cost of the supply chain is minimized with respect to number of shipments among players, replenishment time and credit period. The model is supported with numerical examples. The best possible policy is worked out and sensitivity is carried out to search out critical inventory parameters. The players are advocated to join hand to hand to run a business by joint decisions.