International Journal of Science, Engineering and TechnologyAuthors: Awanish Kumar, Dr. Pinky Pandey
Abstract: This paper formulates a joint inventory model, which considers the realities of today’s supply chain system through considering three main features: price-sensitive and stock-dependent demand, a vendor–buyer price bargaining policy, and bi-level credit. The nature of the proposed model is unlike those used in previous inventory models with fixed price and simple credit which do not consider situations reflecting real life where consumer behaviour along financial constraints plays a crucial role on the demand. The model incorporates a weighted bargaining factor (α) to account for dealing power in transfer pricing and combines a distributed credit policy (T₁ and T₂) to coordinate order-taking and payment leverage. Inventory dynamics are further extended to deterioration by which the model becomes valid for industries processing perishable, and quick obsoleted products. The total cost per cycle is minimized over an integral cost structure, which includes holding/stockout costs, ordering costs, purchasing costs and deterioration and interest costing. Gui simulations programmed in MATLAB show how the negotiation results, credit terms and deterioration rates affect demand, cost and inventory level together. The results highlight the need for a balance between operational efficiency and financial strategies and offer practical implications for vendor-managed inventory systems, wholesale distribution networks, and long-term B2B relationships.
DOI: https://doi.org/10.5281/zenodo.17550506
