Retail Order-Taking Strategies Under Competing Trade Credit Policies With Varying Demands

Abstract

This paper discusses optimal order-taking strategies under competing trade credit policies with varying demands. This study examines three decision-making scenarios, namely, (i) a centralized supply chain, (ii) a decentralized supply chain, and (iii) a coordinated supply chain with a buyback contract. Optimal decisions are obtained for each scenario. We find that if the average forecast value of credit sensitivity is higher than the real value, then the supply chain is at risk of having an overestimated performance; if the average forecast value of credit sensitivity is lower than the actual value, then the supply chain is at risk of having an underestimated performance. As the sensitivity of the credit competition increases, the supply chain’s performance decreases. The supply chain can be coordinated by a buyback contract.