The Impact of Working Capital Financing Costs on the Efficiency of Trade Credit

Devalkar, Sripad K.; Krishnan, Harish

doi:10.1111/poms.12954

Cited by 75 publications

(44 citation statements)

References 29 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Ebrahimi et al (2019) used the delay in payment contract as an incentive to coordinate a supply chain with stochastic, promotionaleffort-dependent demand. Devalkar and Krishnan (2019) examined the use of trade credit in decreasing moral hazard and adopting supply chain coordination in the presence of information asymmetry and financial friction. Ding and Wan (2020) studied supply chain coordination in the presence of capital constraints and production yield uncertainty.…”

Section: Combining Supply Chain Coordination and Operations-finance Imentioning

confidence: 99%

A joint inventory–finance model for coordinating a capital-constrained supply chain with financing limitations

2021

View full text Add to dashboard Cite

Faced with economic recession, firms struggle to find ways to stay competitive and maintain market share. Effective coordination of the supply chain can solve this problem, but this may fail if existing capital constraints and financial flows are ignored. This study addresses the challenge by exploiting coordination through joint decision-making on the physical and financial flows of a capital-constrained supply chain. We also consider the capital-constrained member’s financing limitations that lead to lost sales. Two scenarios based on non-coordinated and coordinated structures are modeled in the form of bi-objective optimization problems that simultaneously optimize system costs and service levels. The models are solved using the $$\varepsilon$$ ε -constraint method. The results indicate that the non-coordinated model cannot satisfy more than about 50% of the demand due to capital shortage and financing limitations, while the coordinated model can satisfy all of the demand via internal financing. Furthermore, the proposed coordination scheme leads to cost reduction for the members and the total system. To motivate all members to accept the proposed coordination scheme, a cost-sharing mechanism is applied to the coordination procedure. Finally, a sensitivity analysis concerning financial parameters is provided for validating the coordination model.

show abstract

Section: Combining Supply Chain Coordination and Operations-finance Imentioning

confidence: 99%

A joint inventory–finance model for coordinating a capital-constrained supply chain with financing limitations

2021

View full text Add to dashboard Cite

show abstract

“…The above literature has shown that the trade credit financing has a more important impact on the profit. Devalkar and Krishnan (2019) studied how trade credit coordinates the supply chain when considering the costly working capital financing of supplier. Gupta and Chutani (2019) studied the financing decision considering supply interruption, and found that the retailer can alleviate the impacts of supply disruption through advance sale financing.…”

Section: Literaturementioning

confidence: 99%

Optimal channel strategies in a supply chain under green manufacturer financial distress with advance payment discount

Zhang

Wang

2020

Int Trans Operational Res

View full text Add to dashboard Cite

Green manufacturers are always faced with capital constraints in reality, while the previous literature has shown that internal financing is more effective than external financing. Given manufacturers' financial constraints, this paper studies and compares the optimal green decisions and profits under single-channel or dual-channel strategies with and without green investment. Therefore, the main contribution of the paper is determining the optimal channel strategy of supply chains under advance payment financing. The results indicate that the retailer's optimal channel strategy is to provide advance payment financing to the manufacturer who introduces online channel and produces green products, which are beneficial to the economic and environmental performance. Besides, green investment can facilitate a win-win scenario if the price elasticity of the demand for the retail channel is smaller than a threshold. Furthermore, green investment increases the retailer's acceptance of online channel. The results of our research can provide decision support for decision makers under the advance payment financing.

show abstract

“…Trade credit is a risk-sharing and coordination mechanism that is widely offered by a dominant supplier to empower downstream wholesalers that commonly suffer from capital shortages ( Yang and Birge, 2018 , Devalkar and Krishnan, 2019 ). Lee and Rhee’s (2011) seminal study on SC coordination via trade credit examines channel coordination from a supplier’s perspective.…”

Section: Literature Reviewmentioning

confidence: 99%

“… Zhang et al (2014) examine how channel coordination is impacted by the simultaneous use of trade credit and a quantity discount contract. Focusing on moral hazards and working capital financing costs, Devalkar and Krishnan (2019) study a two-echelon SC and examine channel coordination. They find that reverse factoring programs combined with trade credit can improve SC efficiency.…”

Section: Literature Reviewmentioning

confidence: 99%

“…With probability

, there is no trade disruption and the market follows its normal pattern (i.e.,

). This assumption is extensively used in the SC disruption literature (e.g., Tomlin, 2009 , Dong and Tomlin, 2012 , Asian and Nie, 2014 , Snyder et al, 2016 , Devalkar and Krishnan, 2019 , Hosseini-Motlagh et al, 2019 ). Table 2 provides a complete list of notations used throughout this paper.…”

Section: Problem Description and Benchmark Modelsmentioning

confidence: 99%

See 1 more Smart Citation

Trade disruptions, behavioral biases, and social influences: Can luxury sporting goods supply chains be immunized?

Wang

Dickson

2020

Transportation Research Part E: Logistics and Transportation Re

View full text Add to dashboard Cite

Highlights A dual channel supply chain with multi-tiered products experiencing trade disruption and market volatility is studied. A flexible trade credit contract with minimum order quantity (MOQ) is devised. A coordination mechanism under social influences and behavioral biases is established. Impacts of trade disruptions, social influences, and loss-aversion on channel coordination are studied.

show abstract

The Impact of Working Capital Financing Costs on the Efficiency of Trade Credit

Cited by 75 publications

References 29 publications

A joint inventory–finance model for coordinating a capital-constrained supply chain with financing limitations

A joint inventory–finance model for coordinating a capital-constrained supply chain with financing limitations

Optimal channel strategies in a supply chain under green manufacturer financial distress with advance payment discount

Trade disruptions, behavioral biases, and social influences: Can luxury sporting goods supply chains be immunized?

Contact Info

Product

Resources

About