In the present study, the authors formulate an integrated supply chain model with multivariate demand under progressive credit period for deteriorating items. This paper develops the integrated models with the supplier's trade offer of credit, i.e., supplier offers a deal to the retailer that if he settles the outstanding amount by first offered credit period, the supplier will not charge any interest. If the retailer pays after this but before second credit period, then the supplier charges the retailer on the unpaid balance. If the retailer pays after second credit period, then he will have to pay interest more than in the first credit period. Demand rate depends upon the selling price as well as the stock level available. Shortages are also taken into account. In the proposed model, all increasing deterministic demands are discussed analytically, numerically and graphically in the environment of credit period. This study aims at developing a two-echelon integrated buyer-vendor relationship from the perspective of solving the problem of cost distribution among them.

From the traditional point of view, the vendor and the buyer are considered as two individual entities with different objectives and self-interest that are often contradictory to each other. But in present day conditions, with rising costs, globalization trends, shrinking resources, shortened product life cycle and quicker response time, increasing attention has been placed on the collaboration of the whole supply chain system. An effective supply chain network requires a cooperative relationship between the vendor and the buyer. It assumes that the buyer must pay off as soon as the items are received. However, in real life scenarios, suppliers often offer trade credit as a marketing strategy to increase sales and reduce on-hand stock. This leads to a reduction in the buyer's holding cost of finance. In addition, during the time of the credit period, buyers may earn interest on the money. In fact, buyers, especially small businesses, which tend to have a limited number of financing opportunities, rely on trade credit as a source of short-term funds. So, supplier credit works to the advantage of both the supplier and the buyer.

The classical inventory models have considered demand rates that were either constant or depended upon a single factor only, like stock, time, etc. However, changing market conditions have rendered such a consideration quite unfruitful, since in real life situation, a demand cannot depend exclusively on a single parameter. A combination of two or more factors grant more authenticity to the formulation of the model.

Operations Management Journal, Integrated Vendor-Buyer Cooperative Model, Multivariate Demand, Progressive Credit Period, Cost Distribution, Product Life Cycle, Supply Chain Network, Economic Production Quantity, EPQ Model, Deterioration Costs, Decision Variables, Information Management, Human Resource Management.