THE EFFECT OF FINANCING ON A BUDGET-CONSTRAINED SUPPLY CHAIN UNDER WHOLESALE PRICE CONTRACT

Xiangfeng Chen () and Guohua Wan ()
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Xiangfeng Chen: School of Management, Fudan University, 670 Guoshun Road, Shanghai, 200433, China
Guohua Wan: Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai, 200052, China

Asia-Pacific Journal of Operational Research (APJOR), 2011, vol. 28, issue 04, 457-485

Abstract: This paper examines the impact of financing on the performance of a two-level supply chain consisting of a supplier and a budget-constrained retailer. To carry out our study, we set up a three-stage Stackelberg game under a wholesale price contract with a financial market. We show that financing from a competitive financial market can create value for both the supplier and the retailer. We also demonstrate that in a competitive financial market with symmetric information on the retailer's initial budget, the retailer's operational and financial decisions could be decoupled. We provide numerical results to shed light on additional managerial insights as well.

Keywords: Supply chain coordination; financial service; wholesale price contract; budget constraint; limited liability (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:wsi:apjorx:v:28:y:2011:i:04:n:s0217595911003193

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DOI: 10.1142/S0217595911003193

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