Research On Dynamic Incentive Mechanism Based On Trade Credit In Supply Chain Under The Asymmetric Information

One of the most important issues in the field of supply chain management is to design an efficient strategy that guarantees supply chain and members’ benefit in the supply chain is obtained. In the supply chain, it’s very important to control the logistics flow、information flow and cash flow. For the past most researches are only focusing on the logistics flow and information flow, but neglecting the management of capital flow. The trade credit as a kind of incentive mechanism which is not only can optimize the capital flow in the supply chain and improve the operation efficiency of the whole supply chain, but also can encourage retailer to improve the order and increase the profit of the supply chain system.However, in the supply chain, each enterprise as an independent economic individual has the private information. The system can’t work effectively with the asymmetric information because the member who has the private information in order to get more benefits will choose to hide the information. Therefore, information inferior party designs the contract to make the information superiority report the real information become very important.Therefore, considering the supply chain combined with a single supplier and a single retailer and the retailer’s cost information is the private information, the article researches that the supplier how to design the trade credit contract to tempt the retailer tell the real cost information, avoiding the adverse selection. What’s more, we consider the trade credit how to influence the decision of the member of supply chain under the asymmetric information. The research conclusion may be contribution as follows:Section 3 drives the content of this article. Firstly, we introduce the conception and function of the trade credit. Trade credit as a short-time financing way can integrate the whole supply chain well and improve the efficiency of supply chain. Secondly, supplier need to design the trade credit contract to discriminate the retailer’s cost type because the asymmetric information may influence the operation of supply chain. Based the research above, we provide the game order and the trade credit menu under the one-time and multi-stage cooperation respectively.Section 4 mainly researches the incentive effect of trade credit under the asymmetric information in two-level supply chain. Firstly, we build a single stage game model based on the trade credit incentive under the principal-agent framework; and solve the model based on the direct revelation principle by using Lagrange method and optimization algorithms. We make further efforts to analyze the supplier’s credit decision and the retailer’s operation decision under the asymmetric information. What’s more, we compare with the system’s profits under the symmetric and asymmetric information. The results of research show that the reasonable contract which is designed by the supplier could incentive the retailer to release the real cost information and avoid the adverse selection so that increase the system’s profit.Section 5 mainly researches the dynamic incentive effect of trade credit under the asymmetric information in two-stage supply chain. Considering that the members of the supply chain will attach more and more importance to the long-term and multistage cooperation, we extend the one- stage cooperation mode to two- stage cooperation mode. The supplier designs the trade credit contract menu under the complete-commitment. We build the two-stage adverse selection model based on the principal-agent and deal with it using the Lagrange method. We discuss the incentive effect of the trade credit on the long-term cooperation and the retailer’s operation decision. We also compare the supplier’s credit decision 、the retailer’s operation decision and the profit of supply chain under the one-stage and two-stage cooperation mode. It illustrates that the period of the trade credit in the two-stage is longer than in the one-stage. So in the two-stage cooperation mode the retailer prefers to improve the order quantity to increasing the profit of the entire chain.