Permissible delay period and pricing decisions in a two-echelon supply chain

Honglin Yang, Heping Dai and Wenyan Zhuo

Applied Economics Letters, 2017, vol. 24, issue 12, 820-825

Abstract: Suppliers often offer trade credits to their capital-constrained retailers to stimulate more sales. The permissible delay period, as a variable factor, influences almost all decisions in a trade credit contract. In this article, we consider a two-echelon supply chain involving a supplier and a capital-constrained retailer in which the demand is the retail price- and time-dependent. We propose a decision model to determine the optimal delay period and pricing decisions under a noncooperative Stackelberg game with the supplier as the leader. We obtain the analytical-form optimal solutions. Our analysis reveals the influence of the delay period on the wholesale and retail prices. Numerical examples further clarify our theoretical results.

Date: 2017
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DOI: 10.1080/13504851.2016.1231889

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