Supply chain coordination with trade credit and quantity discount incorporating default risk

Zhang, Qinhong; Dong, Ming; Luo, Jianwen; Segerstedt, Anders

doi:10.1016/j.ijpe.2014.03.019

Cited by 127 publications

(62 citation statements)

References 47 publications

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“…For simplicity, the rate of the default risk given the credit period offered by the retailer is FðNÞ ¼ 1 À e ÀkN , where k [ 0. This default risk pattern is used in some studies (Lou and Wang 2012;Zhang et al 2014). …”

Section: Problem Description and Formulationmentioning

confidence: 99%

Optimal replenishment and credit policy in supply chain inventory model under two levels of trade credit with time- and credit-sensitive demand involving default risk

Mahata¹,

Mahata²,

2017

J Ind Eng Int

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Traditional supply chain inventory modes with trade credit usually only assumed that the up-stream suppliers offered the down-stream retailers a fixed credit period. However, in practice the retailers will also provide a credit period to customers to promote the market competition. In this paper, we formulate an optimal supply chain inventory model under two levels of trade credit policy with default risk consideration. Here, the demand is assumed to be credit-sensitive and increasing function of time. The major objective is to determine the retailer's optimal credit period and cycle time such that the total profit per unit time is maximized. The existence and uniqueness of the optimal solution to the presented model are examined, and an easy method is also shown to find the optimal inventory policies of the considered problem. Finally, numerical examples and sensitive analysis are presented to illustrate the developed model and to provide some managerial insights.

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Section: Problem Description and Formulationmentioning

confidence: 99%

Optimal replenishment and credit policy in supply chain inventory model under two levels of trade credit with time- and credit-sensitive demand involving default risk

Mahata¹,

Mahata²,

2017

J Ind Eng Int

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“…Delayed payments are sometimes allowed to enable firms that have trade credit extended to them experience the quality of the product provided (Deloof et al, 1996;Ng et al, 1999). Zhang et al (2014) noted that when payments are delayed an optimal order quantity should be reached by the selling firm reducing trade credit extension to customers to avoid default risk. But, according to Ferrando and Mulier (2013) EU firms could insure their accounts receivable against risk of defaults that could be used as collateral for bank loans.…”

Section: Literature Reviewmentioning

confidence: 99%

Delaying Payments after the Financial Crisis: Evidence from EU Companies

Obeng

2017

Acta Univ. Agric. Silvic. Mendelianae Brun.

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OBENG ISAAC KWAME ESSIEN. 2017. Delaying Payments after the Financial Crisis: Evidence from EU Companies. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 65(2): 447-463.The paper investigates economic impact of delayed payments caused by liquidity crisis in the European Union. Using micro data sets on financial statements of 54,277 firms for the period of 2005 to 2014 inclusive, we perform panel data analysis by estimating fixed effects regression models with selected macroeconomic shocks. The results show high variability of late payments during financial crisis compare to period of relative stable economic situations and late payments is significantly evident across countries under different economic conditions. Additionally, we identify positive relationship between the response variable, late payments, and firm profitability measured with returns on assets, but negative relationship with firm total assets as it depends on the speed of collections from receivables. The results suggest delays in payment of invoices beyond the given credit period across the different European Union member countries.

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“…Wu and Chan [37] and Wu et al [38] extended the research of Lou and Wang [36] to deteriorating products. Zhang et al [39] discussed the coordination with quantity discount contract under credit risk with stochastic demand conditions. However, the literature above does not consider the effect on demand of the environmental awareness about carbon emissions of the consumers.…”

Section: Literature Reviewmentioning

confidence: 99%

Sustainable Trade Credit and Replenishment Policies under the Cap-And-Trade and Carbon Tax Regulations

2015

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Abstract:The paper considers the sustainable trade credit and inventory policies with demand related to credit period and the environmental sensitivity of consumers under the carbon cap-and-trade and carbon tax regulations. First, the decision models are constructed under three cases: without regulation, carbon cap-and-trade regulation, and carbon tax regulation. The optimal solutions of the retailer in the three cases are then discussed under the exogenous and endogenous credit periods. Finally, numerical analysis is conducted to obtain conclusions. The retailer shortens the trade credit period as the environmental sensitivity of the consumer is enhanced. The cap has no effects on the credit period decisions under the carbon cap-and-trade regulation. Carbon trade price and carbon tax have negative effects on the credit period. The retailer under carbon cap-and-trade regulation is more motivated to obey regulations than that under carbon tax regulation when carbon trade price equals carbon tax. Carbon regulations have better effects on carbon emission reduction than with exogenous credit term when the retailer has the power to decide with regards credit policies.

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Supply chain coordination with trade credit and quantity discount incorporating default risk

Cited by 127 publications

References 47 publications

Optimal replenishment and credit policy in supply chain inventory model under two levels of trade credit with time- and credit-sensitive demand involving default risk

Optimal replenishment and credit policy in supply chain inventory model under two levels of trade credit with time- and credit-sensitive demand involving default risk

Delaying Payments after the Financial Crisis: Evidence from EU Companies

Sustainable Trade Credit and Replenishment Policies under the Cap-And-Trade and Carbon Tax Regulations

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