Purchase order financing: credit, commitment, and supply chain consequences
| Autor: | Anne Lange, MJ Matthew Reindorp, Fehmi Tanrisever |
|---|---|
| Přispěvatelé: | Tanrısever, Fehmi, Operations Planning Acc. & Control |
| Jazyk: | angličtina |
| Rok vydání: | 2018 |
| Předmět: |
Sequential game
Transparency (market) Supply chain 0211 other engineering and technologies Production set 02 engineering and technology Management Science and Operations Research Newsvendor model Microeconomics 0502 economics and business Production (economics) Finance Capital constraint 050208 finance 021103 operations research Imperfect financial markets business.industry Purchase order 05 social sciences Informational transparency Computer Science Applications restrict ComputerApplications_GENERAL Purchase order financing Credit limit Business Capital constraints Capital market |
| Zdroj: | Operations Research Operations Research, 66(5), 1287-1303. INFORMS Institute for Operations Research and the Management Sciences |
| ISSN: | 0030-364X |
| Popis: | We study a supply chain where a retailer buys from a supplier who faces financial constraints. Informational problems about the supplier’s demand prospects and production capabilities restrict her access to capital. By committing to a minimum purchase quantity, the retailer can mitigate these informational problems and expand the supplier’s feasible production set. We assume a newsvendor model of operations and analyze the strategic interaction of the two parties as a sequential game. Key parameters in our model are the supplier’s ex ante credit limit, her informational transparency—which conditions the amount of additional capital released by the commitment—and the demand characteristics of the final market. We show that in equilibrium the supplier can benefit from a lower ex ante credit limit or lower informational transparency. The retailer always benefits from an increase in these parameters. We also indicate limits to the commitment approach: under certain conditions, the retailer may prefer to relax the supplier’s financial constraint by adjusting the wholesale price, or a combination of wholesale price and commitment. Our study provides a novel perspective on capital market frictions in supply chains. The e-companion is available at https://doi.org/10.1287/opre.2018.1727 . |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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