A Game-Theoretic Credit Period and Promotion Model in a Supplier-Retailer Channel

Ezimadu, Peter E.; Ezimadu, Sophia O.

doi:10.9734/arjom/2022/v18i11609

Cited by 3 publications

(3 citation statements)

References 22 publications

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“…Based on the credit function proposed by [3], we adopt the credit functions as the retailer and the manufacturer's credit functions, respectively. Also and are their respective proportionality constants.…”

Section: Promotion-demand and Credit Functionmentioning

confidence: 99%

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A Mathematical Model of Optimal Manufacturer-Retailer Trade Credit Policy with End-User Credit Support

Ezimadu

2023

ARJOM

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The formulation and incorporation of credit function into trade credit models is a much recent development. In addition extension of this innovation to the end-user has not been achieved. This work models trade credit interaction extension from a manufacturer to a consumer through the retailer. It considers a Stackelberg game-theoretic model setting in which the manufacturer provides channel trade credit through the retailer to the end-user, while the retailer engages in promotion of the product. The paper uses backward induction to obtain the Stackelberg equilibrium for the promotion effort, the retailer’s credit period and the manufacturer’s credit period. It also obtains the long-run Stackelberg equilibria for the decision variables. The paper shows that the retailer is more liberal with allowable credit period than the manufacturer. In general, the players are credit period-liberal with retail margin, and ungenerous with credit period with manufacturer’s margin. It further shows that the manufacturer’s credit period increases more rapidly than the retailer’s credit period with retailer’s margin. On the other hand the manufacturer’s credit period decreases more rapidly than the retailer’s credit period with the manufacturer’s margin.

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Section: Promotion-demand and Credit Functionmentioning

confidence: 99%

“…Trade credit provision depends on a number of market variables. The adoption of functional dependence between credit provision and these variables has only been recently designed by Ezimadu and Ezimadu [3]. This paper adopts this function extending it to the provision of credit to the end-user.…”

Section: Introductionmentioning

confidence: 99%

A Mathematical Model of Optimal Manufacturer-Retailer Trade Credit Policy with End-User Credit Support

Ezimadu

2023

ARJOM

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“…We adopt the credit function Ezimadu and Ezimadu (2022) where 𝑆 𝑚 , 𝑟 𝑝 , 𝐾 and 𝑆 𝑡 are supplier's price margin, promotion effort, stabilizing proportionality constant and credit period respectively. Thus, we have the credit function 𝐶 𝑖 (𝑀 𝑖 , 𝜃 𝑖 , 𝑡 𝑖 ) = 𝐾 𝑀 𝑀 𝑖 √𝜃 𝑖 𝑡 𝑖 where 𝐾 𝑀 = stabilizing proportionality constant, 𝑀 𝑖 = manufacturer's price margin, 𝜃 𝑖 = promotion effort, 𝑡 𝑖 = credit period.…”

Section: Credit Functionmentioning

confidence: 99%

Modelling a manufacturer-retailers trade credit supply chain using game theory

Ezimadu¹,

Ezimadu²

2023

wojast

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Game-theoretic trade credit models are quite scarce, especially in relation to product promotion. This work examined a trade credit supply chain involving a manufacturer and two retailers in a decentralised supply chain in which the retailers engage in product promotion while the manufacturer financed them through credit provision. It considered a supply chain structure in which the manufacturer provides trade credit to the retailers and a situation in which he does not provide trade credit. It used Stackelberg game theory to determine the optimal promotion efforts, the credit periods and the players’ payoffs, and showed that while the manufacturer is better-off with the retailers’ efforts, the retailers need to consciously determine appropriate optimal effort to avoid getting short-changed. It also showed that while credit period reduces with the manufacturer’s margin, it increases with a retailer’s margin. It further showed that while the retailers’ payoffs reduce continuously with credit period, the manufacturer’s payoff is fixed in the long-run irrespective of the credit period provided by the manufacturer to the retailers. By comparison the players as well as the channel perform better with the adoption of trade credit, however a retailer must avoid placing he price margin at equality with that of the manufacturer if he hopes to enjoy long credit period.

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A Review of Stackelberg Game Theory Model on Trade Credit

Ezimadu,

Tsetimi,

Okwonu

2024

ejtas

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Over the years, game theory has been used extensively to study interactions between the supplier and the retailer in business environment. Recently, a number of researchers have applied Stackelberg game theory on trade credit in centralized and decentralized channels. In this work, we reviewed the assumptions of the Stackelberg game theory model, its solution, its limitations and further extensions were also considered. Furthermore, how the Stackelberg game model applies to trade credit has been analyzed.

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A Game-Theoretic Credit Period and Promotion Model in a Supplier-Retailer Channel

Cited by 3 publications

References 22 publications

A Mathematical Model of Optimal Manufacturer-Retailer Trade Credit Policy with End-User Credit Support

A Mathematical Model of Optimal Manufacturer-Retailer Trade Credit Policy with End-User Credit Support

Modelling a manufacturer-retailers trade credit supply chain using game theory

A Review of Stackelberg Game Theory Model on Trade Credit

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