Inventory Strategy of Supply Chain Under Delay in Payments

Abstract

In the field of supply chain, pricing and inventory strategies have always been important issues for scholars to study. This paper uses Stackelberg game theory as a basic analysis tool to study the effect of deferred payment period and interest rate on the profit of each component of the supply chain, as well as the profit and inventory cost of the whole supply chain. From the angle of maximum profit of manufacturer, retailer and the whole supply chain, the manufacturer determines the optimal deferred payment period, and the retailer determines the optimal retail price and order quantity. The model provides decision reference for each member of the secondary supply chain. The conclusion is that: After the supply chain implements the deferred payment strategy, the profits of manufacturers, retailers, and the entire supply chain are increased, and the inventory cost of the entire supply chain is reduced; the lowering of the manufacturer’s interest payment rate will lead to optimal extension of deferred payment period. The extension of its term will increase the profits of each subject in the supply chain, and the inventory costs of the supply chain will decrease, ultimately realizes optimal inventory management.