Inventory Control and Intermediation in Global Supply Chains

Zhan Qu, Horst Raff and Nicolas Schmitt

No 5269, CESifo Working Paper Series from CESifo

Abstract: The paper develops a simple theoretical model of inventory control in global supply chains. It identifies a role for intermediaries in managing inventory, and shows that inserting an intermediary as an additional link in a supply chain is profitable when demand volatility is high. It also provides conditions under which the intermediary handling inventory is located in the exporting versus the importing country. Trade liberalization in the form of less lumpy trade is shown to expand the role of export and import intermediaries but to have potentially negative effects on the volume of international trade and social welfare in the importing country.

Keywords: international trade; supply chain; inventory; intermediation; lumpy trade (search for similar items in EconPapers)
JEL-codes: F12 F23 L22 (search for similar items in EconPapers)
Date: 2015
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https://www.cesifo.org/DocDL/cesifo1_wp5269.pdf (application/pdf)

Related works:
Working Paper: Inventory control and intermediation in global supply chains (2015)
Working Paper: Inventory Control and Intermediation in Global Supply Chains (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_5269

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