Coordinating a three-level supply chain with delay in payments and a discounted interest rate |
| |
| Affiliation: | 1. Olayan School of Business, American University of Beirut, P.O. Box 11-0236, Riad El Solh, Beirut 1107-2020, Lebanon;2. Department of Mechanical and Industrial Engineering, Ryerson University, 350 Victoria Street, Toronto, Ont. M5B2K3, Canada;1. School of Logistics, Beijing Wuzi University, Beijing, 101149, China;2. School of Economics and Management, Beijing Jiaotong University, Beijing, 100044, China;3. Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong;4. Industrial Engineering, Universitat Politècnica de Catalunya, Barcelona, Spain;1. Suliman S. Olayan School of Business, American University of Beirut, P.O. Box 11-0236, Riad El-Solh Street, Beirut, 1107 2020, Lebanon;2. School of Business, American University in Cairo, P.O. Box 74, AUC Avenue, New Cairo, Cairo, Egypt;1. Department of Industrial & Management Engineering, Hanyang University, Ansan, Gyeonggi-do 15588, South Korea;2. School of Mechanical, Aerospace and Nuclear Engineering, Ulsan National Institute of Science & Technology, Ulsan 44919, South Korea;1. College of Management & Economics, Tianjin University, Tianjin 300072, China;2. Department of Computer Science, Aberystwyth University, Aberystwyth SY23 3DB, UK;1. Faculty of Business Administration, Memorial University of Newfoundland, Canada;2. Department of Management Sciences, University of Waterloo, Canada |
| |
| Abstract: | Both researchers and practitioners recognize the importance of the interactions between financial and inventory decisions in the development of cost effective supply chains. Moreover, achieving effective coordination among the supply chain players has become a pertinent research issue. This paper considers a three-level supply chain, consisting of a capital-constrained supplier, a retailer, and a financial intermediary (bank), coordinating their decisions to minimize the total supply chain costs. Specifically, we consider a retailer managing its cash through the supplier’s bank, in return for permissible delay in payments from the supplier. The bank, benefiting from increasing its cash holdings with the retailer’s cash deposits, offers the supplier a discount on its borrowing rate. We show that the proposed coordination mechanism achieves significant cost reduction, by up to 26.2%, when compared to the non-coordinated model. We also find that, with coordination, the retailer orders in larger quantities than its economic order quantity, and that a higher return on cash for the retailer leads to a higher order quantity. Furthermore, we empirically validate our proposed coordination mechanism, by showing that banks, retailers, and suppliers have much to gain through collaboration. Thus, using COMPUSTAT datasets for the years 1950 through 2012, we determine the most important factors that affect the behavior of the retailers and suppliers in granting and receiving trade credit. Our results indicate that engaging into such a coordination mechanism is a win–win situation to all parties involved. |
| |
| Keywords: | Supply chain management Coordination Lot sizing Delay in payment Cash management |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
