Impact Analysis of Extended Payment Terms in Food Supply Chains During a Demand Shortfall

Alexander Zienau (), Mahdi Alazzeh, Ole Hansen, Christina Imdahl, Marcus Wiens and Frank Schultmann
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Alexander Zienau: 4flow AG
Mahdi Alazzeh: 4flow AG
Ole Hansen: 4flow AG
Christina Imdahl: Eindhoven University of Technology
Marcus Wiens: Technical University Bergakademie Freiberg
Frank Schultmann: Karlsruhe Institute of Technology, Institute for Industrial Production

Chapter Chapter 78 in Operations Research Proceedings 2022, 2023, pp 653-660 from Springer

Abstract: Abstract The current pandemic has disrupted many supply chains, among them food supply chains, and their physical and financial flows. Therefore, companies with high bargaining power may extend their payment terms to downstream suppliers as a reaction to decreased financial cash flow. We model a stylized three-stage food supply chain and use simulation to analyze the effects of a demand shortfall. We then investigate the effects of payment term extensions by different companies. We find that although extending payment terms can be beneficial for a single company in the short run, it will harm the supply chain in the long-run and conclude that incentives should be put into place to motivate companies accordingly.

Keywords: Supply chain management; Disaster and crisis management; Simulation (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/978-3-031-24907-5_78

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