Financing equilibrium in an after-sales service supply chain

Qinglin Luo () and Jianwen Luo ()
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Qinglin Luo: Changsha University of Science and Technology
Jianwen Luo: Shanghai Jiao Tong University

Operational Research, 2024, vol. 24, issue 3, No 8, 30 pages

Abstract: Abstract In recent years supply chain finance plays an important role to enable capital constrained firms secure financing for sustainable operation, especially for small and medium sized enterprises. This paper constructs a Stackelberg model to explore the interaction effect between financing schemes and after-sales service schemes in a supply chain, including a capital-constrained retailer and a well-funded manufacturer. We characterize the optimal decisions for each of the four combinations of two financing schemes and two after-sales service schemes. The results show that the decisions of order quantity and after-sales service level are influenced by the initial capital of the retailer. The retailer on whether to use bank credit, trade credit or both is jointly determined by demand distribution, the initial capital of the retailer, the trade credit interest rate of the manufacturer. Under the same after-sales service scheme, the equilibrium financing scheme is affected by the coefficient of credit guarantee and the initial capital. Furthermore, the results show that the capital constraint could affect who will provide the after-sales service when the shortage of fund brings additional costs.

Keywords: Capital constraints; After-sales service; Trade credit; Credit guarantee; Supply chain financing (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s12351-024-00849-2

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