Finance sourcing in a supply chain

Jing, Bing; Seidmann, Abraham

doi:10.1016/j.dss.2013.01.013

Cited by 123 publications

(57 citation statements)

References 14 publications

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“…This branch of literature aims to provide a rationale for trade credit from various perspectives (Li et al., ; Peura et al., ; Tang et al., ; Xiao et al., ; Zhang et al., ; Wu et al., ). Several papers point out that trade credit has the advantage of risk sharing and consequently mitigating double marginalization compared with bank loan (Jing et al., ; Kouvelis and Zhao, ; Cai et al., ; Jing and Seidmann, ; Yang et al., ; Tang et al., ; Yang et al., ; Jin et al., ; Yang and Birge, ). A number of studies reveal that trade credit could be used to coordinate the capital‐constrained supply chain (Lee and Rhee, , ; Xiao et al., ).…”

Section: Literature Reviewmentioning

confidence: 99%

Financing strategies for a capital‐constrained manufacturer in a dual‐channel supply chain

Xiao

2019

Int Trans Operational Res

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This study investigates a co-opetition-type dual-channel supply chain that consists of a competitive supplier (CS) and a capital-constrained manufacturer (CCM). The CCM procures key components from and simultaneously competes with the CS in the consumer market. To address the CCM's capital constraint, we consider three financing strategies, namely, trade credit, bank loan, and hybrid financing (i.e., combined use of bank loan and equity financing). Game models are established to characterize the interactions between the CS and CCM. The corresponding equilibria are derived under each strategy. Then, comparative analyses are conducted, and the CS's and CCM's preference structures regarding the three strategies are revealed. On this basis, the equilibrium strategy can be concluded as either trade credit or hybrid financing, but never bank loan. Specifically, when the equity financing ratio is small or large, trade credit is an equilibrium strategy. When the equity financing ratio is medium, the equilibrium strategy between trade credit and hybrid financing is determined by consumers' product preference and loan interest rate.accounted for a combined shipping volume of over 533 million units in 2017. This value is equivalent to 36.3% of the global smartphone market. 2 Although the two companies are in fierce competition in their industry, they cooperate with each other in many areas. 3 Notably, Samsung has provided Apple with processors and OLED screens for many years. 4 Such "co-opetition" is prevalent in many high-technology industries. Other typical examples are IBM and Cisco. The former purchases network equipment from the latter, while simultaneously competing in the overall server market. 5 The dual-channel supply chain, in which a supplier provides a manufacturer with key components while the two companies compete with each other in the final market, is common in real businesses. However, in practice, certain manufacturers in such dual-channel supply chains may lack capital to support production. For example, the smartphone screens used by Gionee, a well-known smartphone manufacturer in China, have always been provided by Foxconn. However, in recent years, Gionee has encountered capital-shortage problems and sought financing instruments to support its production. Consequently, one of the critical challenges for Gionee is selecting a suitable financing strategy.Accordingly, we extend the current literature by examining a co-opetition-type dual-channel supply chain, which consists of a competitive supplier (CS) and a capital-constrained manufacturer (CCM). The two firms are cooperative in component supply but competitive in the consumer market. Specifically, the CCM procures components from the CS. Meanwhile, the two companies compete by selling substitutable products in the same consumer market. For the capital constraint of the CCM, we consider three financing strategies. In Strategy 1 (trade credit), the CS offers trade credit to the CCM. In Strategy 2 (bank loan), the CCM seeks a bank loan to support its ...

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Section: Literature Reviewmentioning

confidence: 99%

Financing strategies for a capital‐constrained manufacturer in a dual‐channel supply chain

Xiao

2019

Int Trans Operational Res

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“…Thus, we assume that product price p is an exogenous variable and normalized to 1. The same assumption can be widely found in the literature related to supply chain finance (e.g., Jing and Seidmann, ; Chen et al., ; Gao et al., ; Kouvelis and Zhao, ). Unlike product price, which has a negative effect on product demands, the manufacturer's carbon reduction level positively affects product demands (Cao et al., ).…”

Section: Problem Descriptionmentioning

confidence: 61%

“…Kouvelis and Zhao () develop a newsvendor model to analyze the influences of bank loan and trade credit, and find that the retailer prefers supplier's optimally structured trade credit contract over bank loaning. Jing and Seidmann () investigate the effects of bank loaning and trade credit on mitigating double marginalization and present that, if the unit production cost is relatively low, trade credit is more effective than bank credit in mitigating double marginalization. Chod () studies the effects of both bank credit and trade credit on channel members’ decisions, the result indicates that the channel members may be best off using a combination of bank loaning and supplier trade credit.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal carbon reduction level and ordering quantity under financial constraints

Cao

et al. 2018

Int Trans Operational Res

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Carbon tax policy is widely adopted by many countries to curb carbon emissions. In the context of carbon tax policy, firms have more incentive to improve carbon reduction levels by reducing their carbon tax costs. However, firms need to bear carbon reduction costs that may cause shortage of capital. Thus, firms may face problems of financial constraints, which may demotivate firms to produce greener products. To address the decision-making challenges of firms in the contexts of carbon tax policy and financial constraints, we consider a supply chain with a manufacturer who produces green products and a retailer who sells these products. Our study develops five models to investigate the two firms' optimal wholesale price, carbon reduction level and ordering quantity, according to the manufacturer and retailer with or without financial constraints. Our goal in this study is to explore how carbon tax policy and banks' interest rates affect the profits of the two firms, supply chain and consumer surplus. Certain managerial insights are obtained as follows. We demonstrate that carbon tax policy and banks' interest rates demotivate the manufacturer to produce greener products and demotivate the retailer to order more products. If the interest rate to the manufacturer (retailer) is relatively low, then the manufacturer with financial constraint benefits (harms) the consumers compared with the retailer with financial constraint. Importantly, our analysis suggests that carbon tax policy harms the firms but benefits consumers, and the government in some conditions should reduce unit carbon tax.

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“…Cai et al perform a similar research to Kouvelis and Zhao and draw the similar conclusions. Supplementing these studies, Jing and Seidmann studied a 2‐echelon supply chain composed of a manufacturer and a capital‐constrained retailer. They found that trade credit is much more effective than is bank credit when production costs are low, but that bank credit is more effective when production costs are high.…”

Section: Literature Reviewmentioning

confidence: 99%

Effects of risk aversion and decision preference on equilibriums in supply chain finance incorporating bank credit with credit guarantee

Yan

Liu

et al. 2017

Appl Stoch Models Bus & Ind

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We constructed a Stackelberg game in a supply chain finance (SCF) system including a manufacturer, a capital‐constrained retailer, and a bank that provides loans on the basis of the manufacturer's credit guarantee. To emphasize the financial service providers' risks, we assumed that both the bank and the manufacturer are risk‐averse and formulated trade‐off objective functions for both of them as the convex combination of the expected profit and conditional value‐at‐risk. To explore the effects of the risk preferences and decision preferences on SCF equilibriums, we mathematically analyzed the optimal order quantities, wholesale prices, and interest rates under different risk preference scenarios and performed numerical analyses to quantify the effects. We found that incorporating bank credit with a credit guarantee can effectively balance the retailer's financing risk between the bank and the manufacturer through interest rate charging and wholesale pricing. Moreover, SCF equilibriums with risk aversion are highly affected by the degree of both the lender's and guarantor's risk tolerance in regard to the borrower's default probability and will be more conservative than those in the risk‐neutral cases that only maximize expected profit.

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Finance sourcing in a supply chain

Cited by 123 publications

References 14 publications

Financing strategies for a capital‐constrained manufacturer in a dual‐channel supply chain

Financing strategies for a capital‐constrained manufacturer in a dual‐channel supply chain

Optimal carbon reduction level and ordering quantity under financial constraints

Effects of risk aversion and decision preference on equilibriums in supply chain finance incorporating bank credit with credit guarantee

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