Short-term financing in a cash-constrained supply chain

N.R. Srinivasa Raghavan and Vinit Kumar Mishra

International Journal of Production Economics, 2011, vol. 134, issue 2, 407-412

Abstract: In this paper we consider a two-level supply chain with a single retailer and a manufacturer, where both the firms are facing financial constraints and can not produce/order their optimal quantity. Our work shows that a lender who finances the manufacturer has a motivation to finance the retailer as well. Motivated by this, we investigate lender's problem of financing both the firms by making a joint decision on the loan amount and comparing it with the case when lender makes independent decision on loan amount for both the firms. Our numerical study indicates that if one of the firms in the supply chain has sufficiently low cash, joint decision (we refer to it as supply chain financing) may be better not only for the lender but for the retailer and manufacturer as well.

Keywords: Supply; chain; financing; Cash-constrained; supply; chain; Risk; management; Commercial; financing (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:134:y:2011:i:2:p:407-412

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