Trade credit for supply chain coordination

Lee, Chang Hwan; Rhee, Byong-Duk

doi:10.1016/j.ejor.2011.04.004

Cited by 216 publications

(87 citation statements)

References 25 publications

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“…He also assumed that the demand rate is linked to both the retail price and the customer's trade credit period. Lee and Rhee (2011) derived the optimal mark-down allowance and risk premium in the trade credit for supply chain coordination. Khanra, Ghosh, and Chaudhuri (2011) developed an inventory model with trade credit policy.…”

Section: Introductionmentioning

confidence: 99%

Two-echelon competitive integrated supply chain model with price and credit period dependent demand

Pal

Sana

Chaudhuri

2014

International Journal of Systems Science

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This study considers a two-echelon competitive supply chain consisting of two rivaling retailers and one common supplier with trade credit policy. The retailers hope that they can enhance their market demand by offering a credit period to the customers and the supplier also offers a credit period to the retailers. We assume that the market demand of the products of one retailer depends not only on their own market price and offering a credit period to the customers, but also on the market price and offering a credit period of the other retailer. The supplier supplies the product with a common wholesale price and offers the same credit period to the retailers. We study the model under a centralised (integrated) case and a decentralised (Vertical Nash) case and compare them numerically. Finally, we investigate the model by the collected numerical data.

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Section: Introductionmentioning

confidence: 99%

Two-echelon competitive integrated supply chain model with price and credit period dependent demand

Pal

Sana

Chaudhuri

2014

International Journal of Systems Science

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“…These researchers showed that a trade-credit contract is dominant over bank credit in a centralized situation. Lee and Rhee [31] further analysed this problem in a supply chain; a contract combining trade credit and markdown allowance could coordinate the supply chain. Luo and Zhang [32] derived the equilibrium solution under trade credit with asymmetric information.…”

Section: The Retailer's Capital Constraintsmentioning

confidence: 99%

Research on Pricing and Coordination Strategy of a Sustainable Green Supply Chain with a Capital‐Constrained Retailer

Li-ming

Yao

et al. 2018

Complexity

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With the gradual deepening of environmental problems and the increase in consumer awareness of environmental protection, many enterprises have already begun to pay attention to green supply chain management. However, the price of green products is higher than that of nongreen products, which is an enormous challenge for many small-or medium-sized enterprises. To study the pricing and coordination of green supply chains under capital constraints, a model consisting of a manufacturer and a capital-constrained retailer is established; the manufacturer invests in green products and provides a deferred payment contract. Setting the situation without capital constraints as a benchmark, this study explores the impact of the retailer's capital constraints on the manufacturer's product greenness design; an interesting result shows that deferred payment can help encourage the retailer to order more products and improve the profit of the manufacturer and the efficiency of the entire supply chain as well as the product's greenness level simultaneously. However, the profit of the retailer will be hurt by the deferred payment contract. Therefore, to guarantee the profit of the entire channel and to make the two agents obtain a win-win outcome, a new two-way revenue-sharing contract is designed to coordinate the green supply chain.

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“…The basic form of trade credit is a net-term policy. In a net-term policy (e.g., net 40 days), the seller allows the buyer to delay payment until the net date [16]. Trade credit has been a critical source of working capital for many businesses, especially for start-ups and growing business [2].…”

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confidence: 99%

“…Trade credit has been a critical source of working capital for many businesses, especially for start-ups and growing business [2]. Trade-credit sales represent nearly 18.5% of sales for large US firms [16].…”

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confidence: 99%

“…Cai and Chen [3] find that competition in the financing market will affect retailers financing mode selection and that retailers prefer the one in which the financing market is more competitive. Lee and Rhee [16] also compare trade credit and bank financing in a two-level supply chain and point out that the manufacturer can fully coordinate the supply chain using trade credit with a markdown allowance. Du and Lu [7] study Chinese enterprises, analyze the relative importance of direct bank financing and trade credit, and find that the former is more important in enhancing corporate performance and promoting enterprise development.…”

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confidence: 99%

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Selecting the supply chain financing mode under price-sensitive demand: Confirmed warehouse financing vs. trade credit

Lin¹,

Xiao²,

Zheng³

2021

JIMO

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In a product market with price-sensitive demand, we examine a supply chain consisting of one manufacturer and one capital-constrained retailer. The retailer may purchase by borrowing by securing confirmed warehouse financing (CWF) from a competitive bank or the manufacturers trade credit financing (TCF), provided that it is also to the latters benefit to extend TCF. We obtain the manufacturers optimal pricing decision in the two financing modes under the wholesale price contract that coordinates the supply chain given a wider range of wholesale prices in CWF. We find that CWF is more suitable for the customer segment for which the unit retail price is low and demand is stable, so the product can be monetized quickly; TCF is suitable for the customer segment for which the unit retail price is high and has a high price elasticity of demand and hence for long-term investment. The repurchase price is an important factor affecting the participants selection of CWF.2010 Mathematics Subject Classification. Primary: 91A05, 43K30; Secondary: 37H99.

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Trade credit for supply chain coordination

Cited by 216 publications

References 25 publications

Two-echelon competitive integrated supply chain model with price and credit period dependent demand

Two-echelon competitive integrated supply chain model with price and credit period dependent demand

Research on Pricing and Coordination Strategy of a Sustainable Green Supply Chain with a Capital‐Constrained Retailer

Selecting the supply chain financing mode under price-sensitive demand: Confirmed warehouse financing vs. trade credit

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