Markov Decision Processes: Discrete Stochastic Dynamic Programming
Markov Decision Processes: Discrete Stochastic Dynamic Programming
Principles of Corporate Finance with Cdrom
Principles of Corporate Finance with Cdrom
Option Methods for Incorporating Risk into Linear Capacity Planning Models
Manufacturing & Service Operations Management
Quantifying Operational Synergies in a Merger/Acquisition
Management Science
Pre-IPO Operational and Financial Decisions
Management Science
Inventory Management with Asset-Based Financing
Management Science
TECHNICAL NOTE---Inventory Systems with a Generalized Cost Model
Operations Research
Manufacturing & Service Operations Management
A joint model for cash and inventory management for a retailer under delay in payments
Computers and Industrial Engineering
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Suppliers routinely sell goods to retailers on credit. Common credit terms are tantamount to a schedule of declining discounts (escalating penalties) that depend on how long the retailer takes to pay off the supplier's loan. However, issues such as which stocking policies are optimal in the presence of supplier-provided credit have been investigated only when demand is assumed deterministic. Nearly all stochastic inventory models assume either time-invariant finance charges or charges that may vary with time but not with the age of the credit. In this article we present a discrete time model of the retailer's operations with random demand, which is used to prove that the structure of the optimal policy is not affected by credit terms, although the value of the optimal policy parameter is. This is followed by a continuous time model, which leads to an algorithm for finding the optimal stock level. We also model the supplier's problem and calculate the optimal credit parameters in numerical experiments.