The value of trade credit contract in capital-constrained supply chains
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    Abstract:

    The paper considers a typical two-echelon supply chain,where the retailer buys a single product from the supplier,and sells it with a fixed price in a retail market. Since the retailer is capital-constrained,the supplier offers the retailer a trade credit contract,which allows the retailer to make a delayed payment to the supplier. This paper shows trade credit can encourage a capital-constrained retailer with limited liability to make a greater ordering level,and the ordering level is decreasing in the retailer’s initial budget. Furthermore,the paper shows trade credit contract is able to relax the retailer’s capital constraints,partly coordinate the capital-constrained supply chain,and create new value for all the players.

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  • Online: April 16,2018
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