Research on Retailer's Ordering Decision Under Credit Rating with Stochastic Demand Influenced by Sales Effort

In practice, it's common that a upstream supplier can offer various discounts to her high credit rating downstream retailers, such as wholesale price discount, quantity discount, trade credit and so on. This paper considers a two level supply chain with a supplier and a retailer; the optimal ordering decisions of the retailer are studied under different credit rating status facing stochastic demand. Differ from the traditional literatures, we assume in this paper that the retailer can have the opportunity to influence his credit rating level by the sales effort on his customers, that is, the higher order quantity could induce his supplier to raise his credit up to the so called vip customer and may not otherwise. We show the structure of the optimal policies and discuss the relationship between the optimal ordering and the sales effort. We show that the retailer's profit increases by the initial working capital level. And the retailer's ordering policy is decided not only by his initial capital level, but also by the sales profit cost. In numerical study, we find the retailer will either choose to be normal customer or to be vip customer in different situations.