The strategic value of seller's option in buyback guarantee financing

Yang Huang, Wenxuan Wang and Qiangqiang Wang

International Journal of Mathematics in Operational Research, 2026, vol. 33, issue 1, 88-112

Abstract: This paper extends traditional bank credit (BC) and buyback guarantee (BG) financing models by considering uncertain salvage value, and proposes a novel buyback guarantee financing with seller's option (SBG). We derive the optimal decisions for the bank, retailer, and manufacturer under each financing scheme. Additionally, we compare the optimal decisions for the retailer and manufacturer when the BC contract, BG contract, and SBG contract are feasible. The results reveal that the optimal financing schemes for the manufacturer and retailer are not always aligned. Both parties stand to increase profits with the SBG contract compared to other contracts when the salvage value is high. Furthermore, there is a significant range where the supply chain could generate greater profits with the SBG contract compared to other contracts.

Keywords: seller's option; buyback guarantee financing; bank credit financing; supply chain management. (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.inderscience.com/link.php?id=151176 (text/html)
Access to full text is restricted to subscribers.

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:ids:ijmore:v:33:y:2026:i:1:p:88-112

Access Statistics for this article

More articles in International Journal of Mathematics in Operational Research from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().