Trade credit contract with limited liability
We investigate the joint operational and financial decisions under two alternative forms of procurement contract within the context of a two-echelon supply chain, in which the budget-constrained retailer purchases a single product from the supplier and afterwards sells it in the retailer market to a random demand. First,we consider the case of wholesale contact with External Financing in which the retailer can raise capital from risk-neutral and competitive financing market and pay the up-front full payment to the supplier. Second, we consider the case of trade credit contract with internal Financing in which the supplier allows the retailer to delay payments after demand is realized. Our results show that under wholesale contract with external financing, the retailer can decouple the operational and financial decisions.Under trade credit contract, the limited liabilitys retail would offer higher ordering level than the one in wholesale contract, and the retailer with a lower initial budget would initiate a more aggressive operating strategy.Considering competition on financing service,the supplier would reach internal financings interest rate to external financings interest rate if demand is inelastic to interest rate, waive interest rate if demand is elastic, and charge the retailer a financing interest rate which is nonnegative and less than external financings interest rate if demand is medium elastic
Trade credit Contract, Budget Constraint, Limited Liability Supply Chain
XiangFeng Chen
MS Department School of Management in Fudan University. Visiting Faculty Scholar, IOMS Department Stern School of Business in NYU
国际会议
2007 Conference on Systems Science, Management Science and System Dynamics(第二届系统科学、管理科学与系统动力学国际会议)
上海
英文
253-258
2007-10-19（万方平台首次上网日期，不代表论文的发表时间）