Trade credit financing for supply chain coordination under financial challenges: a multi-leader–follower game approach
Abstract This study is designed to solve supply chain inefficiencies caused by some members' financial problems, such as capital shortages and financing restrictions in a stochastic environment. To this end, we have established a supply chain finance framework by designing two novel coordinatin...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
SpringerOpen
2023-01-01
|
| Series: | Financial Innovation |
| Subjects: | |
| Online Access: | https://doi.org/10.1186/s40854-022-00401-1 |
| _version_ | 1797958460094021632 |
|---|---|
| author | Faranak Emtehani Nasim Nahavandi Farimah Mokhatab Rafiei |
| author_facet | Faranak Emtehani Nasim Nahavandi Farimah Mokhatab Rafiei |
| author_sort | Faranak Emtehani |
| collection | DOAJ |
| description | Abstract This study is designed to solve supply chain inefficiencies caused by some members' financial problems, such as capital shortages and financing restrictions in a stochastic environment. To this end, we have established a supply chain finance framework by designing two novel coordinating contracts based on trade credit financing for different problem settings. These contracts are modeled in the form of multi-leader Stackelberg games that address horizontal and vertical competition in a supply chain consisting of multiple suppliers and a financially constrained manufacturer. However, previous studies in the trade credit literature have addressed only simple vertical competition, that is, seller-buyer competition. To solve the proposed models, two algorithms were developed by combining population-based metaheuristics, the Nash-domination concept, and the Nikaido-Isoda function. The results demonstrate that the proposed supply chain finance framework can eliminate supply chain inefficiencies and make a large profit for suppliers, as well as the financially constrained manufacturer. Furthermore, the results of the contracts’ analysis showed that if the manufacturer is required to settle its payments to suppliers before the end of the period, the trade credit contract cannot coordinate the supply chain because of a lack of incentive for suppliers. However, if the manufacturer is allowed to extend its payments to the end of the period, the proposed trade credit financing contract can coordinate the supply chain. Finally, the sensitivity analysis results indicate that the worse the financial status of the manufacturer, the more bargaining power suppliers have in determining the contract parameters for more profit. |
| first_indexed | 2024-04-11T00:20:26Z |
| format | Article |
| id | doaj.art-1a42554f0dba45119a9e224b2de6c324 |
| institution | Directory Open Access Journal |
| issn | 2199-4730 |
| language | English |
| last_indexed | 2024-04-11T00:20:26Z |
| publishDate | 2023-01-01 |
| publisher | SpringerOpen |
| record_format | Article |
| series | Financial Innovation |
| spelling | doaj.art-1a42554f0dba45119a9e224b2de6c3242023-01-08T12:19:01ZengSpringerOpenFinancial Innovation2199-47302023-01-019113910.1186/s40854-022-00401-1Trade credit financing for supply chain coordination under financial challenges: a multi-leader–follower game approachFaranak Emtehani0Nasim Nahavandi1Farimah Mokhatab Rafiei2Department of Industrial and Systems Engineering, Tarbiat Modares UniversityDepartment of Industrial and Systems Engineering, Tarbiat Modares UniversityDepartment of Industrial and Systems Engineering, Tarbiat Modares UniversityAbstract This study is designed to solve supply chain inefficiencies caused by some members' financial problems, such as capital shortages and financing restrictions in a stochastic environment. To this end, we have established a supply chain finance framework by designing two novel coordinating contracts based on trade credit financing for different problem settings. These contracts are modeled in the form of multi-leader Stackelberg games that address horizontal and vertical competition in a supply chain consisting of multiple suppliers and a financially constrained manufacturer. However, previous studies in the trade credit literature have addressed only simple vertical competition, that is, seller-buyer competition. To solve the proposed models, two algorithms were developed by combining population-based metaheuristics, the Nash-domination concept, and the Nikaido-Isoda function. The results demonstrate that the proposed supply chain finance framework can eliminate supply chain inefficiencies and make a large profit for suppliers, as well as the financially constrained manufacturer. Furthermore, the results of the contracts’ analysis showed that if the manufacturer is required to settle its payments to suppliers before the end of the period, the trade credit contract cannot coordinate the supply chain because of a lack of incentive for suppliers. However, if the manufacturer is allowed to extend its payments to the end of the period, the proposed trade credit financing contract can coordinate the supply chain. Finally, the sensitivity analysis results indicate that the worse the financial status of the manufacturer, the more bargaining power suppliers have in determining the contract parameters for more profit.https://doi.org/10.1186/s40854-022-00401-1Supply chain coordinationFinancial constraintMulti-leader–follower Stackelberg gameTrade credit financingPopulation-based metaheuristics |
| spellingShingle | Faranak Emtehani Nasim Nahavandi Farimah Mokhatab Rafiei Trade credit financing for supply chain coordination under financial challenges: a multi-leader–follower game approach Financial Innovation Supply chain coordination Financial constraint Multi-leader–follower Stackelberg game Trade credit financing Population-based metaheuristics |
| title | Trade credit financing for supply chain coordination under financial challenges: a multi-leader–follower game approach |
| title_full | Trade credit financing for supply chain coordination under financial challenges: a multi-leader–follower game approach |
| title_fullStr | Trade credit financing for supply chain coordination under financial challenges: a multi-leader–follower game approach |
| title_full_unstemmed | Trade credit financing for supply chain coordination under financial challenges: a multi-leader–follower game approach |
| title_short | Trade credit financing for supply chain coordination under financial challenges: a multi-leader–follower game approach |
| title_sort | trade credit financing for supply chain coordination under financial challenges a multi leader follower game approach |
| topic | Supply chain coordination Financial constraint Multi-leader–follower Stackelberg game Trade credit financing Population-based metaheuristics |
| url | https://doi.org/10.1186/s40854-022-00401-1 |
| work_keys_str_mv | AT faranakemtehani tradecreditfinancingforsupplychaincoordinationunderfinancialchallengesamultileaderfollowergameapproach AT nasimnahavandi tradecreditfinancingforsupplychaincoordinationunderfinancialchallengesamultileaderfollowergameapproach AT farimahmokhatabrafiei tradecreditfinancingforsupplychaincoordinationunderfinancialchallengesamultileaderfollowergameapproach |