The joint replenishment problem with trade credits

Abstract

It is a widespread financial practice in procurement management for a supplier aiming to attract customers to offer trade credits when customers make inquiries about the sold products. In this paper, we examine the joint replenishment problem considering trade credits (JRP-TC) under the power-of-two (PoT) policy. We formulate a mathematical model and conduct an analysis that reveals insights into the properties of the optimal objective function. From there, we propose an effective search algorithm that obtains the global optimal solution for the JRP-TC under the PoT policy. Our complexity analysis shows that the JRP-TC and the conventional joint replenishment problem under the PoT policy are pseudo-polynomial time solvable.