Financing newsvendor inventory

Dada, Maqbool; Hu, Qiaoyan

doi:10.1016/j.orl.2008.06.004

Cited by 342 publications

(174 citation statements)

References 10 publications

Supporting

Mentioning

170

Contrasting

Unclassified

Order By: Relevance

“…Probably the most closely related article is by Dada and Hu (2008), who seminally consider a similar model to our traditional role model where a bank provides a loan to the retailer, and characterize the Stackelberg equilibrium. They further suggest a mechanism to partially coordinate the supply chain.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Moreover, as the focus of our model, the retailer is budget-constrained and would borrow capital, either a cash loan or trade credit, from the bank, the 3PL firm, or the supplier. To be in line with Buzacott and Zhang (2004) and Dada and Hu (2008), we assume the retailer has limited liability. We use superscripts S, R, BK, and 3P L to denote the supplier, the retailer, the bank, and the 3PL firm, respectively.…”

Section: The Model and Traditional Rolementioning

confidence: 99%

“…The classic newsvendor without budget constraint is a benchmark model, which is referred to as classic newsvendor throughout 1 At the end of the Appendix, we perform an additional analysis on the case where p is not normalized to demonstrate that our qualitative results sustain regardless of this normalization. We also refer readers to Dada and Hu (2008) for some useful discussion of the impact of p on the optimal solution in the traditional role model. this paper.…”

Section: We Define the Hazard Function H(d) = F (D)/f (D) And The Genmentioning

confidence: 99%

“…Although recent studies (e.g., Buzacott and Zhang, 2004;Dada and Hu, 2008;Jing et al, 2010) on bank financing and trade credit are significant and promising, the extant literature has been silent on the influence of 3PL financing on a budget-constrained supply chain. A research question naturally arises: How would a 3PL firm with ILFS impact the supply chain with a budget-constrained retailer?…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Joint logistics and financial services by a 3PL firm

Chen

Cai

2011

European Journal of Operational Research

120

View full text Add to dashboard Cite

Integrated logistics and financial services have been practiced by third party logistics (3PL) firms for years; however, the literature has been silent on the value of 3PL firms as credit providers in budget-constrained supply chains. This paper investigates an extended supply chain model with a supplier, a budget-constrained retailer, a bank, and a 3PL firm, in which the retailer has insufficient initial budget and may borrow or obtain trade credit from either a bank (traditional role) or a 3PL firm (control role). Our analysis indicates that the control role model yields higher profits not only for the 3PL firm but also for the supplier, the retailer, and the entire supply chain. In comparison with a supplier credit model where the supplier provides the trade credit, the control role model yields a better performance for the supply chain as long as the 3PL firm's marginal profit is greater than that of the supplier. We further demonstrate that, for all players, both the control role and supplier credit models can outperform the classic newsvendor model without budget constraint.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Section: The Model and Traditional Rolementioning

confidence: 99%

Section: We Define the Hazard Function H(d) = F (D)/f (D) And The Genmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Joint logistics and financial services by a 3PL firm

Chen

Cai

2011

European Journal of Operational Research

120

View full text Add to dashboard Cite

show abstract

“…Dada and Hu (2008) also analyzed the decision of a capital-constrained newsvendor who can borrow funds for procurement; from this study, we derive a non-linear loan schedule that coordinates the channel [2]. Chen and Wang (2012) investigate the impacts of limited liability for the performance of SCF and shows that limited liability accounts for the reason why the retailer with a lower initial budget initiates a higher ordering level under trade credit contract [3].…”

Section: Introductionmentioning

confidence: 99%

Robust Decisions of Capital-Constrained Supply Chain with Demand Uncertainty

Yan¹

2014

IJMO

View full text Add to dashboard Cite

Abstract-In this paper, we design a supply chain finance system composed of a capital-constrained retailer, a manufacturer and a commercial bank, with unknown demand distribution. Considering the retailer's capital-constraint degree, credit line and bankruptcy risk, we establish a Stackelberg game in which the manufacturer acts as the leader and the commercial bank as the sub-leader. Based on the profit-maximization objective, we solve the optimal order of the retailer, the optimal interest rate of the commercial bank and the optimal wholesale price of the manufacturer and the robust deviation for each participant based on minimize-maximum-regret. Finally, we conduct numerical examples to make a comparative analysis between these two different decisions and explore the impact of the demand uncertainties on optimal strategies and robust deviations. It concluded that the robust decision provides a conservative strategy for risk aversion and the region of demand intervals has great impact on robust deviations, rather than the optimal decisions.

show abstract

The Role of Financial Services in Procurement Contracts

Caldentey

Chen

2011

The Handbook of Integrated Risk Management in Global Supply Chains

View full text Add to dashboard Cite

In this paper we investigate the interplay between operational and financial decisions within the context of a two-echelon supply chain. A retailer purchases a single product from a supplier and afterwards sells it in the retail market to a random demand. The retailer, however, is budgetconstrained and is therefore limited in the number of units that he may purchase from the supplier. We study two alternative forms of financing that the retailer can use to overcome the limitations imposed by the budget constraint. First, we consider the case of internal financing in which the supplier offers financial services to the retailer in the form of a procurement contract. The type of contracts that we consider allows the retailer to pay in arrears a fraction of the procurement cost after demand is realized. Second, we consider the case of external financing in which a third party financial institution (e.g., a bank) offers a commercial loan to the retailer. Our results show that the performance of the entire supply chain can be severely affected by the lack of financing and that it is in the interest of both players to find ways to finance the retailer's operations. We also show that, for the most part, both the supplier and the retailer (and the entire supply chain) are better off by using internal financing rather than by relying on external financing. From the supplier's point of view, we show that the value of offering internal financing decreases with the size of the retailer's initial budget. This is despite of the fact that the risk of the retailer defaulting on his contractual obligations decreases with his initial budget. Interestingly, from the retailer's standpoint the value of internal financing is non-monotonic in his budget and there is an intermediate value at which his expected payoff is maximized.

show abstract

Financing newsvendor inventory

Cited by 342 publications

References 10 publications

Joint logistics and financial services by a 3PL firm

Joint logistics and financial services by a 3PL firm

Robust Decisions of Capital-Constrained Supply Chain with Demand Uncertainty

The Role of Financial Services in Procurement Contracts

Contact Info

Product

Resources

About