How does the retail price maintain trade-credit management with continuous investment to support the cash flow?

Abstract

In the present era of ever-growing competition, companies use various pricing strategies that add to their sales and profits. The potential to make accurate payments is crucial for companies to support the cash flow and keep a check on liquidity. To settle business transactions of items, both the producer and retailer have to agree upon various payment terms. To control the deterioration, money should be invested in the policy of preservation technology. The demand function is a multiplicative form of selling price and credit period. Shortages are allowed for complete backorder. This study aims to optimize the preservation technology and selling price to increase the total profit under the policy of trade-credit. A numerical example is discussed with sensitivity analysis, which shows the impact of preservation technology in observing the loss of deterioration. Under the retail price and trade-credit policy management, it has been found a big amount of profit compared with the literature.