Modeling and simulation for supply chain finance under uncertain environment
This paper studies the role of factoring in a bilateral supply chain, where both the supplier and retailer are financially constrained. Applying the stylized Stackelberg game, we analytically present that the supplier’s capital shortage limits the advantage of trade credit provided to the retailer....
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Vilnius Gediminas Technical University
2020-06-01
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| Series: | Technological and Economic Development of Economy |
| Subjects: | |
| Online Access: | https://journals.vgtu.lt/index.php/TEDE/article/view/12054 |
| _version_ | 1819139854910357504 |
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| author | Wei Jin Chengfu Wang |
| author_facet | Wei Jin Chengfu Wang |
| author_sort | Wei Jin |
| collection | DOAJ |
| description | This paper studies the role of factoring in a bilateral supply chain, where both the supplier and retailer are financially constrained. Applying the stylized Stackelberg game, we analytically present that the supplier’s capital shortage limits the advantage of trade credit provided to the retailer. To overcome this limitation, we design a hybrid strategy composing of trade credit and factoring, and then investigate how the supplier uses factoring strategy to achieve the best performance. Analytical and numerical results show that: (1) each supply chain partner can benefit from factoring, and the benefits depend on operational and financial characteristics; (2) in a fairly priced factoring market, bankruptcy costs reduce the benefits of factoring, but does not change the dominance of full factoring; (3) in a strategically priced factoring market, partial factoring may dominate full factoring. Managerially, our study implies that a supplier may benefit from dividing his accounts receivable when facing a factor with a strong pricing ability.
First published online 28 February 2020 |
| first_indexed | 2024-12-22T11:29:17Z |
| format | Article |
| id | doaj.art-46e9864f1dab4396a5a28ad624709ff1 |
| institution | Directory Open Access Journal |
| issn | 2029-4913 2029-4921 |
| language | English |
| last_indexed | 2024-12-22T11:29:17Z |
| publishDate | 2020-06-01 |
| publisher | Vilnius Gediminas Technical University |
| record_format | Article |
| series | Technological and Economic Development of Economy |
| spelling | doaj.art-46e9864f1dab4396a5a28ad624709ff12022-12-21T18:27:39ZengVilnius Gediminas Technical UniversityTechnological and Economic Development of Economy2029-49132029-49212020-06-0126472575010.3846/tede.2020.1205412054Modeling and simulation for supply chain finance under uncertain environmentWei Jin0Chengfu Wang1School of Finance, Zhejiang University of Finance and Economics, Hangzhou, 310018, ChinaSchool of Information, Zhejiang University of Finance and Economics Dongfang College, Haining, 314408, ChinaThis paper studies the role of factoring in a bilateral supply chain, where both the supplier and retailer are financially constrained. Applying the stylized Stackelberg game, we analytically present that the supplier’s capital shortage limits the advantage of trade credit provided to the retailer. To overcome this limitation, we design a hybrid strategy composing of trade credit and factoring, and then investigate how the supplier uses factoring strategy to achieve the best performance. Analytical and numerical results show that: (1) each supply chain partner can benefit from factoring, and the benefits depend on operational and financial characteristics; (2) in a fairly priced factoring market, bankruptcy costs reduce the benefits of factoring, but does not change the dominance of full factoring; (3) in a strategically priced factoring market, partial factoring may dominate full factoring. Managerially, our study implies that a supplier may benefit from dividing his accounts receivable when facing a factor with a strong pricing ability. First published online 28 February 2020https://journals.vgtu.lt/index.php/TEDE/article/view/12054operations researchstrategydecision makinggame theory |
| spellingShingle | Wei Jin Chengfu Wang Modeling and simulation for supply chain finance under uncertain environment Technological and Economic Development of Economy operations research strategy decision making game theory |
| title | Modeling and simulation for supply chain finance under uncertain environment |
| title_full | Modeling and simulation for supply chain finance under uncertain environment |
| title_fullStr | Modeling and simulation for supply chain finance under uncertain environment |
| title_full_unstemmed | Modeling and simulation for supply chain finance under uncertain environment |
| title_short | Modeling and simulation for supply chain finance under uncertain environment |
| title_sort | modeling and simulation for supply chain finance under uncertain environment |
| topic | operations research strategy decision making game theory |
| url | https://journals.vgtu.lt/index.php/TEDE/article/view/12054 |
| work_keys_str_mv | AT weijin modelingandsimulationforsupplychainfinanceunderuncertainenvironment AT chengfuwang modelingandsimulationforsupplychainfinanceunderuncertainenvironment |