Optimal Payment Time for a Retailer Under Two Levels of Delay of Payment

The retailer is usually allowed a permissible credit period to pay back the dues without paying any interest to the wholesaler,and the customer is usually allowed a permissible credit period to pay back the dues without paying any interest to the retailer too. In this problem the retailer can pay the wholesaler either at permissible delay fixed by the wholesaler in settling the account or later, the customer can pay the retailer either at permissible delay fixed by the retailer in settling the account or later too. This research develops a model for optimal payment time for a retailer under the condition of two levels of delay of payment. The model is solved through the total revenue and cost function, indicate that the retailer has always an option to pay after the permissible credit period depending on interest rates, purchase and selling price, and the deterioration rate of the products. The research provider a theoretic basis for retailers to make the optimal time of payment.