ABSTRACT
We consider a supply chain in which both the supplier and the distributor experience capital constraints. Due to the capital constraints, the supplier faces a capital deficit during the production period and the distributor faces a capital deficit during the sales period. Under the bank loan financing, we derive the optimal strategies for both the supplier and the distributor. Then we propose a mutual-aid mechanism under which the distributor provides an advance payment to the supplier during the production period, and the supplier offers a deferred payment trade credit to the distributor during the sales period. As the demand is uncertain, there is a bankruptcy risk with the distributor, which is taken into consideration in our model. We develop a Stackelberg game model and derive the optimal strategies under the mutual-aid mechanism. Our results indicate that the mutual-aid mechanism can improve the profits for both the supplier and the distributor, comparing to the bank loan financing case.
Disclosure statement
No potential conflict of interest was reported by the authors.