Retailer's pricing, credit and inventory policies for deteriorating items in response to temporary price/credit incentives

It is the purpose of this paper to model the retailer's profit-maximizing retail promotion strategy, when confronted with a vendor's trade promotion offer of credit and/or price discount on the purchase of regular or perishable merchandise. At issue is the determination of the three main elements of the retailer's promotion strategy, namely (i) the size of the special order to be placed from the vendor, under the different types of possible trade incentives offered; (ii) the price and/or credit-terms incentives to be passed on to its own customers to stimulate demand on a temporary basis; and (iii) the quantity to be sold under these one-time-only conditions. (C) 2002 Elsevier Science B.V. All rights reserved.