Journal of the Korean Operations Research and Management Science Society (한국경영과학회지)

The Korean Operations Research and Management Science Society (한국경영과학회)
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Supply Chain Coordination Under a Trade Credit Contract and a Quantity Discount Contract

외상판매 계약과 물량할인 계약을 통한 공급망 협력 방안

  • Published : 2006.03.01
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Abstract

Consider a supply chain in which a vendor supplies a product to a buyer. We assume that the buyer's and vendor's inventory cost structures are different, resulting in differences in inventory order/delivery cycle times. Here, if one party insists on its individually optimal order/delivery quantity, the other party will suffer from mismatches in cycle times. Under this scenario, coordination contracts that make use of either a Net Term/Two parts Term Trade Credit or a Quantity Discount are designed to align individually optimal order Quantities. We compare and analyze the perform ances of these contracts. The focus of the comparison is the ability of contracts to generate a lower cost for the supply chain. We show that a Trade Credit policy can be effectively used to coordinate a supply chain. In many cases it will result in a lower supply chain cost compared to that achieved by using a Quantitative Discount policy.

Keywords

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