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Permissible delay period and pricing decisions in a two-echelon supply chain

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  • Honglin Yang
  • Heping Dai
  • Wenyan Zhuo

Abstract

Suppliers often offer trade credits to their capital-constrained retailers to stimulate more sales. The permissible delay period, as a variable factor, influences almost all decisions in a trade credit contract. In this article, we consider a two-echelon supply chain involving a supplier and a capital-constrained retailer in which the demand is the retail price- and time-dependent. We propose a decision model to determine the optimal delay period and pricing decisions under a noncooperative Stackelberg game with the supplier as the leader. We obtain the analytical-form optimal solutions. Our analysis reveals the influence of the delay period on the wholesale and retail prices. Numerical examples further clarify our theoretical results.

Suggested Citation

  • Honglin Yang & Heping Dai & Wenyan Zhuo, 2017. "Permissible delay period and pricing decisions in a two-echelon supply chain," Applied Economics Letters, Taylor & Francis Journals, vol. 24(12), pages 820-825, July.
    • Handle: RePEc:taf:apeclt:v:24:y:2017:i:12:p:820-825
    DOI: 10.1080/13504851.2016.1231889
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    Cited by:

    1. Beatriz Abdul-Jalbar & Roberto Dorta-Guerra & José M. Gutiérrez & Joaquín Sicilia, 2021. "Production/Inventory Policies for a Two-Echelon System with Credit Period Incentives," Mathematics, MDPI, vol. 9(15), pages 1-25, July.

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