Channel coordination, trade credit and quantity discounts for freight cost

Gwo Ji Sheen, Yu Chung Tsao

Research output: Contribution to journalArticlepeer-review

73 Scopus citations

Abstract

In this paper we consider vendor-buyer channels subject to trade credit and quantity discounts for freight cost. We deal with the problems of determining the vendor's credit period, the buyer's retail price and order quantity while still maximizing profits. We focus on how channel coordination can be achieved using trade credit and how trade credit can be affected by quantity discounts for freight cost. We show that profits for both parties increase under channel coordination when the credit period is kept within an appropriate range. This range becomes wider as the discount for freight rates increases.

Original languageEnglish
Pages (from-to)112-128
Number of pages17
JournalTransportation Research Part E: Logistics and Transportation Review
Volume43
Issue number2
DOIs
StatePublished - Mar 2007

Keywords

  • Channel coordination
  • Freight cost
  • Quantity discounts
  • Trade credit

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