**Assumptions**


12. If *N* ≥ *M*, then the retailer finances and pays its supplier the entire amount of the delayed paymen<sup>t</sup> (1 − *ρ*)*cDT* at the end of the trade credit *M*, and then pays down the loan after time *N* at which the retailer starts to receive sales revenue from its customers. For the collateral deposit the retailer deposits the sales revenue into an interest bearing account until the end of the permissible delay *M*. If *T* ≥ *M*, then the retailer pays the supplier all units sold by *M*, keeps the profit for the use of the other activities, and starts paying for the interest charges on the items sold after *M*.
