TY - JOUR
T1 - Supply chain coordination under trade credit and quantity discount with sales effort effects
AU - Wang, Zhihong
AU - Liu, Shaofeng
N1 - Publisher Copyright:
© 2018 Zhihong Wang and Shaofeng Liu.
PY - 2018/5/7
Y1 - 2018/5/7
N2 - The purpose of this paper is to investigate the role of trade credit and quantity discount in supply chain coordination when the sales effort effect on market demand is considered. In this paper, we consider a two-echelon supply chain consisting of a single retailer ordering a single product from a single manufacturer. Market demand is stochastic and is influenced by retailer sales effort. We formulate an analytical model based on a single trade credit and find that the single trade credit cannot achieve the perfect coordination of the supply chain. Then, we develop a hybrid quantitative analytical model for supply chain coordination by coherently integrating incentives of trade credit and quantity discount with sales effort effects. The results demonstrate that, providing that the discount rate satisfies certain conditions, the proposed hybrid model combining trade credit and quantity discount will be able to effectively coordinate the supply chain by motivating retailers to exert their sales effort and increase product order quantity. Furthermore, the hybrid quantitative analytical model can provide great flexibility in coordinating the supply chain to achieve an optimal situation through the adjustment of relevant parameters to resolve conflict of interests from different supply chain members. Numerical examples are provided to demonstrate the effectiveness of the hybrid model.
AB - The purpose of this paper is to investigate the role of trade credit and quantity discount in supply chain coordination when the sales effort effect on market demand is considered. In this paper, we consider a two-echelon supply chain consisting of a single retailer ordering a single product from a single manufacturer. Market demand is stochastic and is influenced by retailer sales effort. We formulate an analytical model based on a single trade credit and find that the single trade credit cannot achieve the perfect coordination of the supply chain. Then, we develop a hybrid quantitative analytical model for supply chain coordination by coherently integrating incentives of trade credit and quantity discount with sales effort effects. The results demonstrate that, providing that the discount rate satisfies certain conditions, the proposed hybrid model combining trade credit and quantity discount will be able to effectively coordinate the supply chain by motivating retailers to exert their sales effort and increase product order quantity. Furthermore, the hybrid quantitative analytical model can provide great flexibility in coordinating the supply chain to achieve an optimal situation through the adjustment of relevant parameters to resolve conflict of interests from different supply chain members. Numerical examples are provided to demonstrate the effectiveness of the hybrid model.
UR - http://www.scopus.com/inward/record.url?scp=85047527654&partnerID=8YFLogxK
UR - https://pearl.plymouth.ac.uk/context/pbs-research/article/1286/viewcontent/2018_MPE_paper_led_by_Zhihong___for_PEARL.pdf
U2 - 10.1155/2018/2190236
DO - 10.1155/2018/2190236
M3 - Article
AN - SCOPUS:85047527654
SN - 1024-123X
VL - 2018
JO - Mathematical Problems in Engineering
JF - Mathematical Problems in Engineering
M1 - 2190236
ER -