Coordinate inventory models with two-level credit policy and a price negotiation scheme in declining market

In this study, the coordinated inventory models with allowable trade credit are developed. The demand is considered to be price-sensitive and decreasing function of time. The models consider the two-level trade credit policy, i.e., vendor offers some credit period to buyer and buyer in turn offers partial credit period to the customer. An iterative procedure is developed for the integrated models to determine the buyer's optimal price and production/order strategy. It is observed that even if buyer's share is less, the total joint profit of the supply chain increases. To counter balance, the buyer's loss due to the joint decision, a negotiation scheme is introduced to distribute the extra profit between the vendor and the buyer. A numerical example and sensitivity analysis are given to validate the proposed problem. It is observed that price discount policy is beneficial and increases the total joint profit.