A two-stage supply chain with order cost reduction and credit period incentives for deteriorating items

In the proposed model, we consider the scenario of a supply chain with a single vendor and a single buyer for a single product, taking into consideration the effect of deterioration and credit period incentives. We also consider the situation in which the vendor and the buyer decide upon an investment in ordering cost reduction and coordinate their inventory policies to minimize their joint average annual cost. We study and analyze the benefits of order cost reduction and credit period incentives in a coordinated supply chain. The numerical examples with an exponential ordering cost function are used to evaluate the benefit of the proposed coordinated strategy.