Ten. Supply Chain Finance

  1. Panos Kouvelis2,
  2. Lingxiu Dong2,
  3. Onur Boyabatli3 and
  4. Rong Li3
  1. Panos Kouvelis2 and
  2. Wenhui Zhao1

Published Online: 11 OCT 2011

DOI: 10.1002/9781118115800.ch10

The Handbook of Integrated Risk Management in Global Supply Chains

The Handbook of Integrated Risk Management in Global Supply Chains

How to Cite

Kouvelis, P. and Zhao, W. (2011) Supply Chain Finance, in The Handbook of Integrated Risk Management in Global Supply Chains (eds P. Kouvelis, L. Dong, O. Boyabatli and R. Li), John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9781118115800.ch10

Editor Information

  1. 2

    Olin Business School, Washington University, St. Louis, Missouri, USA

  2. 3

    Lee Kong Chian School of Business, Singapore Management University, Singapore

Author Information

  1. 1

    Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai, People's Republic of China

  2. 2

    Olin Business School, Washington University, St. Louis, Missouri, USA

Publication History

  1. Published Online: 11 OCT 2011
  2. Published Print: 4 NOV 2011

ISBN Information

Print ISBN: 9780470535127

Online ISBN: 9781118115800

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Keywords:

  • bankrupt-prone supply chain;
  • supplier financing;
  • wholesale price contracts

Summary

This chapter addresses the financing of inventories within the supply chain, and investigates the use of bank financing versus trade credit financing. It explores the implications of financing decisions on relevant retail ordering and supplier (wholesale) pricing decisions. The chapter illustrates that in the presence of bankruptcy risks and related costs for the supply chain, firms’ financing and operational decisions are interdependent, and the choice of financing affects the attained supply chain efficiency. It considers a linear supply chain of a retailer and a supplier. The chapter analyzes the supply chain interactions under a wholesale price contract and in the presence of bankruptcy costs. It presents results on the “bankrupt-prone newsvendor”, and the “selling to the bankrupt-prone newsvendor” analysis. The chapter provides the solution of the newsvendor-like retailer’s problem under trade credit contracts, and the corresponding supplier’s problem for optimal setting of the contract parameters.

Controlled Vocabulary Terms

Bankruptcy; Financial supply chain management; Risk management