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Optimising the credit term decisions in a dual-channel supply chain

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  • Wenguang Tang
  • Haitao Li
  • Kaihao Cai

Abstract

We study the problem of credit term optimisation in a dual-channel supply chain setting, where a manufacturer serves as the leader in a Stackelberg game to determine the credit term and wholesale price for its retailer, in conjunction with the pricing decision for its direct sales channel. The retailer optimises its retail price given the credit term and wholesale price prescribed by the manufacturer. Decentralised optimal solutions are obtained to optimise the manufacturer's credit term decision while anticipating the retailer's autonomous price optimisation decision. Then a centralised decision paradigm is analysed to show the increase of total profitability through cooperation. In order to incentivise both parties to cooperate, we propose a new credit term-based contract for coordinating the dual-channel supply chain and devise a profit-sharing scheme for the manufacturer and retailer to achieve a win-win. Numerical studies are performed to obtain additional managerial insights.

Suggested Citation

  • Wenguang Tang & Haitao Li & Kaihao Cai, 2021. "Optimising the credit term decisions in a dual-channel supply chain," International Journal of Production Research, Taylor & Francis Journals, vol. 59(14), pages 4324-4341, July.
    • Handle: RePEc:taf:tprsxx:v:59:y:2021:i:14:p:4324-4341
    DOI: 10.1080/00207543.2020.1762018
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    Cited by:

    1. Dey, Bikash Koli & Sarkar, Mitali & Chaudhuri, Kripasindhu & Sarkar, Biswajit, 2023. "Do you think that the home delivery is good for retailing?," Journal of Retailing and Consumer Services, Elsevier, vol. 72(C).
    2. Wen-Bin Wang & Qiang Sun & Xiu-Xia Yan & Yuan-Qing Liu, 2022. "Dual-Channel Supply Chain Financing Operation Strategy Considering Free-Riding Effect under Different Power Structures," Sustainability, MDPI, vol. 14(15), pages 1-27, July.
    3. Matsui, Kenji, 2022. "Should a retailer bargain over a wholesale price with a manufacturer using a dual-channel supply chain?," European Journal of Operational Research, Elsevier, vol. 300(3), pages 1050-1066.

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