Modelling Customer Satisfaction to Improve Receivables of a Firm in a Supply Chain

Abstract

A firm in a supply chain usually defines payment strategies such as penalty rate, delivery time, customer discount, and quantity of order fulfilment regarding the invoices issued for the products ordered by the customers, whilst these payment strategies affect not only the amount paid by the customers but also customer satisfaction. The main aim of this article is to evaluate the effects of customer satisfaction on the cash inflow of a firm in a supply chain. In fact, this article develops an optimisation mathematical model to maximise the amount of cash received from customer within a time horizon through maximizing customer satisfaction and optimising the payment strategy parameters. Customer satisfaction in each period is defined as a dependent variable of three parameters such as penalty rate, demand variation and delivery time. All the firms in a supply chain can adjust these parameters to improve the amount of cash received from the customers. The penalty rate in each period is related to the amount and time of cash received from the customers in that period and the amount are supposed to be received from the customers in the next period. Consequently, customer discount can be applied to improve the firm's input.