IDEAS home Printed from https://ideas.repec.org/a/taf/tprsxx/v57y2019i2p379-396.html
   My bibliography  Save this article

The value of trade credit with rebate contract in a capital-constrained supply chain

Author

Listed:
  • Jizhou Zhan
  • Xiangfeng Chen
  • Qiying Hu

Abstract

We investigate the value of an innovative trade credit with rebate contract (TCRC) model in a stylised supply chain. In this supply chain, the capital-abundant manufacturer offers an integrated contract involving trade credit, minimum ordering and sales rebate contract to a capital-constrained retailer. To highlight the value of the TCRC model, we compare it with a traditional trade credit financing (TTCF) model in a ‘selling to the newsvendor model’. First, we show that equilibrium strategies exist between the manufacturer and the retailer under the TCRC or TTCF model. Second, this study investigates equilibrium selection between the TCRC and TTCF models for the individual and the supply chain. Finally, we show the manufacturer’s pricing policy, wherein the TCRC model outperforms the TTCF model for the players. Furthermore, we conduct a set of numerical experiments to show evidence for theoretical analysis and measure the operation efficiency of the TCRC model for players in the supply chain.

Suggested Citation

  • Jizhou Zhan & Xiangfeng Chen & Qiying Hu, 2019. "The value of trade credit with rebate contract in a capital-constrained supply chain," International Journal of Production Research, Taylor & Francis Journals, vol. 57(2), pages 379-396, January.
    • Handle: RePEc:taf:tprsxx:v:57:y:2019:i:2:p:379-396
    DOI: 10.1080/00207543.2018.1442946
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00207543.2018.1442946
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00207543.2018.1442946?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chen, Jianxin & Zhang, Tonghua & Zhou, Yong-wu, 2021. "Stochastic sensitivity and dynamical complexity of newsvendor models subject to trade credit," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 181(C), pages 471-486.
    2. Hannan Amoozad Mahdiraji & Aliasghar Abbasi Kamardi & Moein Beheshti & Seyed Hossein Razavi Hajiagha & Luis Rocha-Lona, 2022. "Analysing supply chain coordination mechanisms dealing with repurposing challenges during Covid-19 pandemic in an emerging economy: a multi-layer decision making approach," Operations Management Research, Springer, vol. 15(3), pages 1341-1360, December.
    3. Xie, Xiaofeng & Chen, Xiangfeng & Xu, Xun & Gu, Jing, 2024. "Financing a dual capital-constrained supply chain: Profit enhancement and diffusion effect of default risk," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 181(C).
    4. Xie, Xiaofeng & Shi, Xinyu & Gu, Jing & Xu, Xun, 2023. "Examining the Contagion Effect of Credit Risk in a Supply Chain under Trade Credit and Bank Loan Offering," Omega, Elsevier, vol. 115(C).
    5. Wu, Chengfeng & Liu, Xin & Li, Annan, 2021. "A loss-averse retailer–supplier supply chain model under trade credit in a supplier-Stackelberg game," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 182(C), pages 353-365.
    6. Jiang, Wen-Hui & Xu, Ling & Chen, Zhen-Song & Govindan, Kannan & Chin, Kwai-Sang, 2022. "Financing equilibrium in a capital constrained supply Chain: The impact of credit rating," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    7. Dey, Bikash Koli & Seok, Hyesung, 2024. "Synergic effect of carbon regulation policies and multi-period credit financing in global retailing with reworking," Journal of Retailing and Consumer Services, Elsevier, vol. 79(C).
    8. Wang, Jing & Wang, Kai & Li, Xiang & Zhao, Ruiqing, 2022. "Suppliers’ trade credit strategies with transparent credit ratings: Null, exclusive, and nonchalant provision," European Journal of Operational Research, Elsevier, vol. 297(1), pages 153-163.
    9. Bi, Gongbing & Wang, Pingfan & Wang, Dujuan & Yin, Yunqiang, 2021. "Optimal credit period and ordering policy with credit-dependent demand under two-level trade credit," International Journal of Production Economics, Elsevier, vol. 242(C).
    10. Junhai Ma & Lijiao Gong & Jie Fan, 2022. "Pricing strategy and coordination of small‐ to medium‐sized enterprises based on bank‐insurance cooperative financing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3915-3930, December.
    11. Liang, Guitian & Gu, Chaocheng, 2021. "The value of target sales rebate contracts in a supply chain with downstream competition," International Journal of Production Economics, Elsevier, vol. 242(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:tprsxx:v:57:y:2019:i:2:p:379-396. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TPRS20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.