An optimization approach for joint pricing and ordering problem in an integrated inventory system with order-size dependent trade credit

Under a business trading environment, it is common for the trade credit to depend on the order size. Therefore, it is important to discuss the single-supplier and single-buyer supply chain problem which includes order-size dependent trade credit. In this study, an integrated inventory model with a price sensitive demand rate, determining jointly economic lot size of the buyer's ordering and the supplier's production batch, are developed to maximize the total profit per unit time. An efficient algorithm is provided to obtain the optimal solution, and then numerical examples are presented to illustrate the theoretical results. Finally, the comparison between whether an optimal solution is jointly or independently determined is also provided. (C) 2009 Elsevier Ltd. All rights reserved.