Abstract:

In many cases a retailer is not capable of settling an invoice immediately upon receiving it and is given an option by the supplier to settle the invoice within a definite period. The retailer can sell the goods before the deadline, accumulate revenue and earn interest. If the retailer is not able to meet his obligations within the deadline, he is charged an interest. This paper introduces a model which enables a retailer to set an optimal price of goods under permissible delay in payments, and to determine the maximum term of payment. The model is based on the assumption of time-dependent demand and has been developed for non-deteriorating goods. The paper further analyzes a situation in which the retailer sells all the goods in time, and a situation in which the deadline was not met. Theoretical results are demonstrated by an illustrative example where authors also study the impact of changes in some parameters value on the model’s behaviour.

The authors of the paper used methods of analysis and synthesis and methods of mathematical analysis (differential calculus of multivariable functions, solution of ordinary differential equations).
The model suggested in the paper can be expanded in the future. One of the options is improving the model by adding the order quantity and the moment of ordering goods.