Available online at www.sciencedirect.com ScienceDirect Materials Today: Proceedings 5 (2018) 19080–19091 www.materialstoday.com/proceedings 2214-7853 © 2018 Elsevier Ltd. All rights reserved. Selection and/or Peer-review under responsibility of Materials Processing and characterization. ICMPC_2018 Modeling of a two echelon inventory system under trade credit with finite production rate Seelam Krugon a,* Dega Nagaraju b a Dept of Mechanical Engg, Bapatla Engineering College, Bapatla-522 101, Andhra Pradesh, India b Centre for Innovative Manufacturing Research (CIMR), VIT University, Vellore-632014, Tamilnadu, India Abstract The present competitive business situation, it has become typical of providing trade credit by the supplier (may be a manufacturer) to the vendor (may be a retailer) as part of improving the sales revenues. In this particular paper, development of a two echelon inventory model is proposed by considering a one supplier supplying a one kind of product to a one vendor under trade credit with finite production rate. The important aim of the proposed model is to exemplify the optimality of cycle time, inventory levels and total supply chain variable costs of the coordinated model. Ordering costs, carrying costs and transportation costs are considered for the proposed development of the model. The mathematical model is formulated in two fold: the expressions for total variable cost of the vendor and supplier are developed first and then for the entire supply chain. A solution procedure is developed and a MATLAB computer program is written to solve the model along with the sensitivity analysis is carried out. © 2018 Elsevier Ltd. All rights reserved. Selection and/or Peer-review under responsibility of Materials Processing and characterization. Keywords: Supply chain; Trade credit, Finite production rate; Total variable cost; 1. Introduction Supply chain is involved in the substantial flow of products from manufacturers to customers in the complex organizations, in the chain and resources. SCM is, therefore, the process of integrate and utilize from suppliers to end customers; so that products are manufactured and deliver to the final user at the accurate quantities and at the exact time, while reducing overheads and fulfilling customer desires. Applying strategies of a SC has significant impact on organizations monetary concert. To face global market firm transitions, the supply chain models have been developed. * Corresponding author. Tel.: 91-949-172-6634; E-mail address: seelamkrugon@gmail.com.