Incentive Of Supply Chain With Trade Credit Under Mixed Asymmetric Information

As major source of a enterprise’s short-term financing, trade credit is not only fit for the situation of finance constrained but also normal operation. A manufacturer in supply chain can incent the retailer increasing order with its role of incentive, and it could be used by the retailer in investing. The whole system and partners can also increase profits with an appropriate credit term in result of higher fund utilization ratio and value creating.The asymmetric information existing in supply chain management practice usually cause adverse selection and moral hazard problem, which not only affect the coordination in supply chain but also reduce efficiency. With the strengthening of time and space dimensions, the information asymmetry and interest confliction of its members becomes prominent. Thus, it’s important to design a reasonable contract and incentive mechanism. According to the above problems, two studies we researched as follows:In chapter four, our study mainly focus on the incentive mechanism based on trade credit contract for a supply chain under asymmetric information of adverse selection, where the supply chain consists of a supplier and a retailer. First, the policies and profits of members are analyzed by using Stackelberg game theory, principal theory and incentive mechanism theory under symmetric information; Then when retailer owns private holding cost information, the supplier designs the incentive mechanism based on trade credit contract. We build the optimization model based on principal-agent frame, and obtain the optimal trade credit policies by using the hamilton function of the optimal control theory. And compare the credit decision and ordering decision with the case of information asymmetry. Finally, in numerical simulation, we respectively compare the profits of members and the whole supply chain under asymmetric information with the situation under symmetric information, and discuss the influence of this incentive mechanism on supplier’s and retailer’s profits.In chapter five, our study mainly focus on the incentive mechanism based on trade credit contract for a supply chain under asymmetric information of adverse selection and moral hazard. First, the policies and profits of members are analyzed by using Stackelberg game theory, principal theory and incentive mechanism theory under symmetric information; Then when retailer owns both private holding cost information and effort level, the supplier designs the incentive mechanism based on trade credit contract. We build the optimization model based on principal-agent frame, and obtain the optimal trade credit policies by using mathematical programming and optimality condition of function. And compare the credit decision and effort decision with the case of information asymmetry. Finally, in numerical simulation, we respectively discuss the influence of this incentive mechanism on supplier’s and retailer’s profits, get the conclusion that trade credit’s encouragement retailers improve overall system performance under mixed asymmetric information compared with asymmetric information. Hope we could provide some theory support for decision makers in supply chain management.