A loss-averse retailer–supplier supply chain model under trade credit in a supplier-Stackelberg game

Chengfeng Wu, Xin Liu and Annan Li

Mathematics and Computers in Simulation (MATCOM), 2021, vol. 182, issue C, 353-365

Abstract: At present, the research on relevant decision-making considering the loss risk/ default risk in trade credit is on the rise This paper presents a supply chain model with a risk-averse retailer and a supplier offering loss sharing and trade credit in a supplier-Stackelberg game where the decision variables are the optimal order quantity and loss sharing ratio. The model is analyzed and compared to a newsvendor model without loss sharing and trade credit. Meanwhile, we provide a numerical example and sensitivity analysis to obtain managerial insights. We determine the trend and sensitivity hierarchies between the parameters and the optimal results. The main novelty and contribution of the paper can be demonstrated in two aspects. First, the risk tolerance largely affects the profit of supply chain members, therefore, we incorporate risk-averse parameter into trade credit policy. Second, we incorporate loss sharing into the supplier-Stackelberg game with trade credit for a loss-averse retailer. The findings highlight that for a risk-averse retailer, the supplier can improve the retailer’s utility and its own profits through trade credit and loss sharing.

Keywords: Loss-aversion; Supply chain; Trade credit; Loss sharing; Supplier-Stackelberg game (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378475420303803
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:matcom:v:182:y:2021:i:c:p:353-365

DOI: 10.1016/j.matcom.2020.10.025

Access Statistics for this article

Mathematics and Computers in Simulation (MATCOM) is currently edited by Robert Beauwens

More articles in Mathematics and Computers in Simulation (MATCOM) from Elsevier
Bibliographic data for series maintained by Catherine Liu ().