Supply chain coordination with stock-dependent demand rate and credit incentives

Yang, Shuai; Hong, Ki Sung; Lee, Chulung

doi:10.1016/j.ijpe.2013.06.014

Cited by 38 publications

(15 citation statements)

References 19 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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“…And under this assumption, some literatures have sought to coordinate the supply chain inventories under a trade credit environment to enhance supply chain efficiency. Luo (2007), for example, analyzed supply chain coordination using credit periods [18], and Yang et al (2014) examined the efficiency of quantity discounts on supply chain coordination [19]. These assumptions about the demand mean that there is no default risk for trade credit, which means the borrower can repay the credit loan certainly.…”

Section: Literature Reviewmentioning

confidence: 99%

The Incentive Model in Supply Chain with Trade Credit and Default Risk

Hong

Yan

et al. 2019

Complexity

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Trade credit is widely used for its advantages. However, trade credit also brings default risk to the manufacturer due to the uncertain demand. And moral hazard may aggravate the default risk. The purpose of this paper is to investigate the role of moral hazard in trade credit and explore incentive contract under uncertain demand and asymmetric information. We consider a two-echelon supply chain consisting of a risk-neutral retailer ordering a single product from a risk-neutral manufacturer. Market demand is stochastic and is influenced by retailer’s sales effort which is his private information. Incentive theory is used to develop the principal-agent model and get the incentive contract from the manufacturer’s perspective. Results show that the retailer will reduce his effort level to get more profit and the manufacturer’s profit will be reduced, in the case of asymmetric information. Facing this result, the manufacturer will reduce the order quantity in incentive contract to lessen his losses. Numerical examples are provided to illustrate all these theoretical results and to draw managerial insights.

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“…Among them, quantity discount contract and revenue sharing contract were widely used and discussed. For example, based on the stock-dependent phenomenon, Parthasarathi et al [39] studied the role of the quantity discount and the return policy in the coordination of a supply chain; based on the stockprice dependent demand, Panda [40] discussed influences of revenue and cost sharing contracts; Yang et al [41] researched the influence of the credit period and quantity discount to coordinate a two-echelon supply chain.…”

Section: Supply Chain Collaboration In 2004 Boyaci and Gallegomentioning

confidence: 99%

Investment Decision-Making and Coordination of Supply Chain: A New Research in the Big Data Era

Liu

2016

Discrete Dynamics in Nature and Society

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In a Big Data environment, in order to study the decision-making problem of Big Data information investment and the effects of using Big Data information to improve industry cost on supply chain coordination, firstly the importance of Data Company in supply chain was analyzed, and the original supply chain model was built. Meanwhile, some changes of consumer behavior were analyzed in a Big Data environment. Based on these, the market demand function and the benefit model of stakeholder were built and analyzed. Findings: (1) The first finding is whether an enterprise was suitable for gaining Big Data to improve its costs, which was determined by the cost improvement coefficient; namely, it was related to the ability of excavating and using the value of Big Data. (2) Whether the supply chain was the decentralized decision-making and the centralized decision-making, the thresholds of acquisition costs on Big Data information were equal. Moreover, the maximum value that they could undertake was same. (3) Meanwhile the fact that the quantity discount contract could achieve a win-win outcome for supply chain members was proved. The discount coefficient was related to consumers' behavior preference in a Big Data environment.

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Supply chain coordination with stock-dependent demand rate and credit incentives

Cited by 38 publications

References 19 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

The Incentive Model in Supply Chain with Trade Credit and Default Risk

Investment Decision-Making and Coordination of Supply Chain: A New Research in the Big Data Era

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