Joint Operational and Financial Collaboration in a Capital-Constrained Supply Chain Under Manufacturer Collateral

2018 ◽  
Vol 35 (03) ◽  
pp. 1850010 ◽  
Author(s):  
Gongbing Bi ◽  
Yalei Fei ◽  
Xiaoyong Yuan ◽  
Dong Wang
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Wholesale Price ◽  
Distribution Channel ◽  
Optimal Solution ◽  
Bank Credit ◽  
Order Quantity ◽  
Purchase Order ◽  
Constraint Problem ◽  
Fierce Competition

Operational collaboration in a supply chain is important due to the fierce competition among supply chains. However, the collaboration in a supply chain is often hindered by its distribution channel’s lack of funds. It is of significance to alleviate the capital constraint problem of the distribution channel and explore new joint operational and financial collaboration solutions. In this paper, we focus on exploring the optimal solution of operational collaboration in the presence of manufacturer collateral. We consider a supply chain consisting of a well-capitalized manufacturer and a capital-constrained retailer that faces difficulties obtaining credit from the bank. To help the retailer access financing for a purchase order, the manufacturer promises to pay the lender a proportion of the retailer’s loan if the retailer goes bankrupt. We find that when the bank credit with manufacturer collateral is considered as a mix of trade credit and bank credit, the retailer’s financing equilibrium depending on the maximum wholesale price what the manufacturer can set, can be neither trade credit nor bank credit alone, but a combination of them. Moreover, the retailer’s order quantity and the chain’s operational collaboration level will benefit from the manufacturer collateral.

scholarly journals Trade Credit with Barter in a Capital-Constrained Supply Chain

2021 ◽  
Vol 13 (20) ◽  
pp. 11361
Author(s):  
Yangyang Huang ◽  
Zhenyang Pi ◽  
Weiguo Fang
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Wholesale Price ◽  
Uncertain Demand ◽  
Equilibrium Strategy ◽  
Optimal Order ◽  
Order Quantity ◽  
Supply Rate ◽  
Optimal Order Quantity ◽  
And Performance

Barter has emerged to alleviate capital pressure, maximize the circulation of goods, and facilitate the disposal of excess inventory. This study considers a two-level supply chain consisting of a manufacturer and a capital-constrained retailer with trade credit, in which the retailer exchanges unsold products for needed subsidiary products on a barter platform. The retailer’s optimal order quantity and the manufacturer’s wholesale price are derived, and the influences of barter and other factors on the equilibrium strategy and performance of the supply chain are examined; these results are verified and supplemented by numerical simulation. We find that the retailer can increase profit by bartering when facing highly uncertain demand, that the retailer’s optimal order quantity increases with the supply rate and demand for subsidiary products, and that both manufacturer and retailer benefit from the high supply rate of subsidiary products. However, barter induces the manufacturer to raise the wholesale price to prevent its profit from being harmed. In addition, the manufacturer suffers from the retailer’s initial capital.

scholarly journals The role of voucher sale in advance for a capital-constrained supply chain

2021 ◽  
Author(s):  
Haijun Wang ◽  
Guanmei Liu
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Optimal Choice ◽  
Bank Loan ◽  
Optimal Decision ◽  
Order Quantity ◽  
Credit Financing ◽  
The Impact

This paper studies voucher sale as an operational method to raise working capital for a supply chain, which consists of a supplier and a capital-constrained retailer. The retailer takes advantage of an online platform to sell vouchers and to get access to borrowing from a bank. By formulating a Stackelberg game model, we show the retailer's possible order quantities in the cases without and with bank loan and analyze the impact of voucher sale on the retailer's optimal choice of order quantity and the supplier's optimal wholesale price. We find that a smaller voucher's price induces the retailer to be more likely to order with loan from a bank while a larger voucher's value induces an order quantity with the loan more difficult to be repaid. In addition, if voucher's price is large, the supplier decides a wholesale price which leads the retailer not to borrow from a bank; and if voucher's price is small, the supplier's optimal decision is obtained by anticipating the retailer to borrow from a bank. We also analyze the impact of voucher sale in the presence of trade credit financing on the firms' decisions. The results show that the voucher's price should be small so that the retailer can repay the supplier if voucher's value is large; otherwise, the retailer either does not borrow from the supplier or may not repay the supplier. Besides, the supplier decides a wholesale price so that the retailer does not borrow or can repay the supplier, except that the voucher's value is large and the voucher's price is medium.

scholarly journals A financing model with rebate contract  in a capital-constrained supply chain

2020 ◽  
Author(s):  
Jizhou Zhan
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Bank Credit ◽  
Optimal Order ◽  
Order Quantity ◽  
Bank Financing ◽  
Marginal Production ◽  
Financing Model ◽  
Rebate Contract ◽  
Opposite Tendency

In a two-level supply chain that includes one supplier and one capital-constrained retailer, this paper investigates a new bank financing model (Model N), in which, the supplier requires the retailer to order a quantity that is not less than a specified minimum ordering quantity (MOQ), rebates the per unit excess that sells over the MOQ, and promises to provide a partial warranty for the bank credit risk if the revenue is below the bankruptcy level of the retailer with the MOQ. This study shows that retailer's optimal order quantity increases with MOQ level and decreases with rebate rate, while supplier's optimal wholesale price shows an opposite tendency. Compared to the traditional bank financing model (Model T), the model N with an appropriate rebate contract will result in a larger order quantity of retailer. Furthermore, model N would benefit the entire supply chain and a Pareto zone of MOQ (or rebate rate) exists, in which, model N outperforms model T for each player. The numerical experiments are performed to illustrate that with increasing the marginal production cost of supplier, the MOQ level is decreasing while rebate rate is increasing in the Pareto zone.

scholarly journals Research on Trade Credit and Bank Credit Based on Dynamic Inventory

2019 ◽  
Vol 11 (13) ◽  
pp. 3608 ◽  
Author(s):  
Lei ◽  
Xu ◽  
Yang
Keyword(s):  
Trade Credit ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Optimal Strategies ◽  
Bank Credit ◽  
Order Quantity ◽  
Short Term ◽  
Initial Capital ◽  
Stock Status ◽  
Business Financing

Trade credit is a short-term business financing based on purchases between the retailer and the supplier. This paper considers a supply chain consisting of a well-funded supplier and a capital-constrained retailer. At the beginning of each sales season, the retailer need to place an order from the supplier to meet the stochastic demand. The capital-constrained retailer determines the order quantity and whether to borrow loans from a bank or the supplier or just use its initial capital, according to its finance and stock status with the wholesale price provided by the supplier. We build the Stackelberg game with the supplier as the leader and divide the retailer’s initial inventory and capital into different wealth regions to discuss the optimal strategies of different wealth regions. We extend to the two-period dynamic financing model based on dynamic inventory and capital flow so as to obtain the optimal strategy matrix of the retailer and the supplier under bank and trade credit. Numerical results validate our theoretical analysis of bank credit and supplier credit with dynamic inventory under different period setting.

scholarly journals Joint financing and ordering decisions in a capital-constrained supply chain with risk preference

2020 ◽  
Author(s):  
Zhiyuan Zhen ◽  
Jing Ru Wang
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Risk Preference ◽  
Bank Credit ◽  
Risk Averse ◽  
Initial Capital ◽  
Preference Behavior ◽  
Credit Financing

We consider a two-echelon supply chain consisting of one dominant supplier and one capital-constrained retailer. The retailer needs to solve the shortage of working capital either from a bank or from its core supplier, which offers trade credit when it is also beneficial to itself. We assume the retailer is risk-averse behavior and the supplier has different risk preference behaviors that jointly model risk-averse, risk-neutral, and risk-taking. With a wholesale price contract, we incorporate each member’s risk preference behavior into its objective function. Then we derive the optimal decisions in a Stackelberg game under bank credit financing and trade credit financing, respectively. We find that there exists a supplier’s risk preference threshold that distinguishes financing scheme. When the supplier is a relatively higher risk preference, trade credit financing makes both the retailer and the supplier better off and is a unique financing equilibrium. Otherwise, the members prefer bank credit financing . Besides, the supplier with relatively higher risk preference behavior prefers the retailer with a low initial capital as a partner; the supplier with relatively lower risk preference behavior prefers the retailer with a higher initial capital level. The above theoretical results are verified by numerical analysis.

scholarly journals Contracts Adjustment under Bilateral Information Updating in a Supply Chain

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-15
Author(s):  
Xinhui Wang ◽  
Yingsheng Su ◽  
Zihan Zhou ◽  
Yiling Fang
Keyword(s):  
Supply Chain ◽  
Production Cost ◽  
Wholesale Price ◽  
Transfer Payment ◽  
Market Demand ◽  
Order Quantity ◽  
Minimum Order ◽  
Information Updating ◽  
Minimum Order Quantity ◽  
Market Outlook

This paper investigates contracts adjustment between one manufacturer and one retailer under bilateral information updating. The manufacturer incurs uncertain production cost and the retailer faces uncertain demand, but they can acquire independent signals to update production cost and demand, respectively. They commit an initial agreement on an initial wholesale price, minimum order quantity, and information sharing as well as the transfer payment and decisions adjustment when information is updated. We find that due to the joint impact of production cost variation and market variation, the manufacturer may not decrease (increase) her wholesale price when the updated production cost is lower (higher) than expected. The retailer places an additional order even if the wholesale price rises when the market outlook is good, but places an order with the minimum order quantity even if the wholesale price falls when the market outlook is bad. Secondly, for a certain level of information accuracy of the production cost and market demand, the retailer is always better off with information updating, but the manufacturer may be worse off with information updating when facing a bad market outlook. Thirdly, when information accuracy of the production cost and market demand varies, the manufacturer only benefits from a high accuracy of production cost. Profits of the retailer and the supply chain are increasing (decreasing) with accuracy of production cost if the updated production cost is larger (smaller) than expected.

scholarly journals The More Supply Chain Control Power, the Better? A Comparison among Four Kinds of Cooperation Models

2015 ◽  
Vol 2015 ◽  
pp. 1-19 ◽  
Author(s):  
Weihua Liu ◽  
Shuqing Wang ◽  
Donglei Zhu
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
The Other ◽  
Order Quantity ◽  
Control Power ◽  
Decentralized Decision Making ◽  
Optimal Value ◽  
Total Profit

This paper introduces the parameter of supply chain control power into existing supply chain coordination models and explores the impacts of control power on the profits of manufacturer, retailer, and the overall supply chain under four modes of decision-making, including the decentralized decision-making dominated by manufacturer, the decentralized decision-making dominated by retailer, centralized decision-making, and Nash negotiation decision-making. Some significant conclusions are obtained. Firstly, supply chain control power does have great impact on the supply chain profits. The profit of the whole supply chain with centralized decision-making is higher than those of the other three modes, while the overall profit of supply chain with decentralized decision-making is superior to the profit when retailer and manufacturer dominate the supply chain together. Secondly, with decentralized decision-making, for manufacturer and retailer, it is beneficial to gain the control powers of the supply chain; however, control power has an optimal value, not the bigger, the better. Thirdly, under certain circumstances, order quantity will increase and the wholesale price will decrease when control power is transferred from manufacturer to retailer. In this case, the total profit of supply chain dominated by retailer will be greater than that dominated by manufacturer.

scholarly journals Incentive Mechanism for Sustainable Improvement in a Supply Chain

2019 ◽  
Vol 11 (13) ◽  
pp. 3508 ◽  
Author(s):  
EuiBeom Jeong ◽  
GeunWan Park ◽  
Seung Ho Yoo
Keyword(s):  
Supply Chain ◽  
Environmental Quality ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Optimal Solution ◽  
Incentive Contract ◽  
Sustainable Improvement ◽  
Profit Performance

In this study, we consider the issue of sustainable development in the supply chain consisting of an original equipment manufacturer (OEM) and a contract manufacturer (CM). We investigate how to facilitate the CM’s investment in the environmental quality of a product so as to properly respond to climate change. We introduce a quantity incentive contract, and obtain the optimal solution based on a Stackelberg game. The OEM, as the focal company, determines the level of the incentive, and the CM, responsible for product design and production, determines its level of environmental quality given the OEM’s incentive offer. To investigate the effectiveness of the quantity incentive contract and provide important implications, we analytically compare the quantity incentive contract with the basic wholesale price contract without any incentives and conduct numerical experiments. Our results reveal that the quantity incentive contract facilitates the CM’s investment in environmental quality, and enhances the environmental, market, and profit performance of not only the CM but also the OEM which pays the incentive. We also show that the quantity incentive contract is suitable to develop a long-term relationship between the OEM and the CM.

scholarly journals Optimal Financing Order Decisions of a Supply Chain under the Retailer's Delayed Payment

2014 ◽  
Vol 2014 ◽  
pp. 1-8 ◽  
Author(s):  
Honglin Yang ◽  
Ya Yu ◽  
Yong Zha ◽  
Jijun Yuan
Keyword(s):  
Numerical Simulation ◽  
Supply Chain ◽  
Trade Credit ◽  
Equilibrium Analysis ◽  
Optimal Order ◽  
Order Quantity ◽  
Optimal Decisions ◽  
Game Equilibrium ◽  
Optimal Order Quantity ◽  
To Receive

In real supply chain, a capital-constrained retailer has two typical payment choices: the up-front payment to receive a high discount price or the delayed payment to reduce capital pressure. We compare with the efficiency of optimal decisions of different participants, that is, supplier, retailer, and bank, under both types of payments based on a game equilibrium analysis. It shows that under the equilibrium, the delayed payment leads to a greater optimal order quantity from the retailer compared to the up-front payment and, thus, improves the whole benefit of the supply chain. The numerical simulation for the random demand following a uniform distribution further verifies our findings. This study provides novel evidence that a dominant supplier who actively offers trade credit helps enhance the whole efficiency of a supply chain.

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