Analysis of trade credit financing in an EPQ environment with credit sensitive demand.

Trade credit financing has become a powerful tool to improve demand and profit in industry. In general, a supplier/retailer frequently offers trade credit to its credit risk downstream member in order to stimulate their respective demand. The main purpose of the present paper is to explore the impact of credit period on the retailer's demand, which may be instant or delayed. An EPQ model under the condition of two echelon trade credit with credit sensitive demand has been analyzed. This type of demand pattern can be observed in many consumer durables. The optimal credit period offered by the retailer and the optimal replenishment time has been jointly evaluated in order to maximize retailer's profit. Results have been validated with the help of examples. Comprehensive sensitivity analysis has been performed on different parameters. [ABSTRACT FROM AUTHOR]