A Sustainable Advance Payment Scheme for Deteriorating Items with Preservation Technology

Abstract

Profitably managing inventories is always a big challenge for retailers in the current context of transparent and competitive business. A general retailer always needs to handle both deteriorating and non-deteriorating products simultaneously to run a business. Deterioration of products sometimes impacts a retailer’s profits badly—a situation which can be alleviated by implementing proper preservation technology. In addition, to improve profits and minimize costs, a retailer always seeks some credit facilities (e.g., advance payment, trade credit facilities, etc.) from the supplier to continue the business smoothly with minimum investment. Advance payment is renowned for preventing the possibility of business orders being canceled and helping the retailer to minimize the risk of investing significant amounts at a single time. The foremost objective of this research is to analyze the facilities of advance payment and preservation technology investment and concurrent attempts to deal with shortages. This study shows that, given the presence of preservation technology, the result of case II is 68.06% higher than that of case I, whereas when preservation technology is absent, the result of case II is 71.93% higher than that of case I. The managerial insights of this analysis reveal that preservation technology attempts to prolong product life by preventing deterioration, which contributes to the retailer’s profitable business. On the other hand, in the case of an advance payment scheme, although the costs are relatively high, the study emphasizes the importance of the advance payment facility as it limits the risk of order cancellation and makes business more flexible for both supplier and retailer. The proposed model is solved by the classical optimization technique. Some theoretical derivations with numerical analysis support the model and provide some managerial insights for practitioners.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 16 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.