A two-level supply chain coordination model for perishable products under optimal markdown time and trade credit policies

This study investigates the effects of markdown and credit policies on perishable products in a two-level supply chain. As a significant funding source, trade credit allows the retailer to receive the products from the manufacturer and pay for them later. The retailer deposits the sales payment in the bank and earns interest while paying interest after the credit’s expiration. In addition to financial concerns, if products are perishable and the demand varies over time, there will be a severe challenge for the retailer to adjust the sales and ordering policies to manage the inventory cost and revenues. Given the importance of price, the retailer examines two sales policies and chooses the more profitable one, either selling all the products at a fixed price or marking down the prices at an appropriate time to boost the demand. Assuming that demand is time-varying, this study determines the cycle length, markdown time, preservation techniques, investment, and trade credit size by considering their relationships in different decision models. Several methods are utilized in an analytical approach to solve the models and find the optimal solutions. Sensitive analyses are also conducted to evaluate the effects of the initial and marked-down price changes on the markdown time, order quantity, and sales volume.