Credit Policy Strategies for Green Product With Expiry Date Dependent Deterioration via Grey Wolf Optimizer

Abstract

In a supply chain that consists of a supplier or manufacturer, a retailer, and a customer, the supplier regularly offers the retailer a pay in later facility in terms of $S$ periods, while the retailer then gives their client a pay in later facility in terms of $N$ periods to increase sales and decrease inventory. Offering trade credit benefits the seller’s sales and profits, but it also increases default risk. As a result, understanding the credit period is becoming widely acknowledged as a key tactic for boosting seller profitability. This study suggests an EOQ model in the perspective of retailer point of view for which: (a) both the supplier and the retailer supply up-stream pay in later facility; (b) downstream trade credit provided from the retailer to the buyer increases opportunity cost and default risk in addition to sales and profitability; (c) items that are degrading not only continue to degrade over time but also have an expiration date. We employed the well-known metaheuristic algorithm Grey Wolf Optimizer (GWO) to solve the optimisation problem because the objective function is high nonlinear nature. In addition, we have compared the results with some other metaheuristic algorithm. In order to highlight the problem and provide managerial advice, we conclude by using some numerical examples.

Keywords

• Inventory model
• perishable goods
• expiration dates
• selling price
• green level dependent demand
• grey wolf optimizer