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Retail Order-Taking Strategies Under Competing Trade Credit Policies With Varying Demands

Juanjuan Qin (), Aina Zhang (), Liangjie Xia () and Mengqi Liu
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Juanjuan Qin: School of Business, Tianjin University of Finance and Economics, Tianjin 300222, China
Aina Zhang: School of Business, Tianjin University of Finance and Economics, Tianjin 300222, China
Liangjie Xia: School of Business, Tianjin University of Finance and Economics, Tianjin 300222, China
Mengqi Liu: Business School, Hunan University, Changsha 410082, China

Asia-Pacific Journal of Operational Research (APJOR), 2017, vol. 34, issue 01, 1-17

Abstract: This paper discusses optimal order-taking strategies under competing trade credit policies with varying demands. This study examines three decision-making scenarios, namely, (i) a centralized supply chain, (ii) a decentralized supply chain, and (iii) a coordinated supply chain with a buyback contract. Optimal decisions are obtained for each scenario. We find that if the average forecast value of credit sensitivity is higher than the real value, then the supply chain is at risk of having an overestimated performance; if the average forecast value of credit sensitivity is lower than the actual value, then the supply chain is at risk of having an underestimated performance. As the sensitivity of the credit competition increases, the supply chain’s performance decreases. The supply chain can be coordinated by a buyback contract.

Keywords: Order strategies; competing trade credit policies; demand risk (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1142/S0217595917400103

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