A Study Of Supply Chain Coordination On Trade Credit

This paper considers the one retailer-one supplier supply chain in whichthe supplier offers trade credit to the retailer. The retailer's purchasingprice charged by the supplier and the length of the credit period offeredby the supplier to the retailer both influence the retailer's determinationand the final demand for the product. Hence this paper considers thesupplier as a leader in the supply chain and both to be his policy variables.Meanwhile, the retailer should determine his pricing and lot-sizing. Thispaper provides procedures for determining the supplier's and the retailer'spolicies under non-cooperative as well as cooperative relationships.Through comparing the level of the supply chain profit under bothconditions, this paper demonstrates the positive effect of the supply chaincoordination. A numerical example is presented to illustrate thisconclusion.