Abstract

For a supply chain coordination to be effective and profitable, it requires a working mechanism among its members to entice some players to join a partnership. Two of the well-known trade credits that are widely used by businesses are the permissible delay in payments and price discounts. This thesis presents models for coordinating supply chains with both trade credits. The first model investigates the effect of utilizing delay in payments in a two-level (manufacturer-retailer) supply chain. It modifies and analyzes three known models of different production and shipping policies to account for delays in payments; it then compares them and highlights the production policy that performed the best with the total system cost being the performance measure. The second model analyzes the coordination of a three-level (supplier-manufacturer- retailer) supply chain with the delay in payments. It analyzes nine different scenarios of permissible delay among the three players. A simulation study was performed and a thorough analysis of the results was used to identify the limitations of all scenarios and to draw some managerial insights and findings. The third model investigates the effect of coupling permissible delay in payments and price discounts for coordinating a three-level. The analysis considers nine different cases of delay-in-payments along with eight cases of price discounts among the three players in the supply chain, totaling seventy-two cases. The numerical examples and the sensitivity analyses show that the coupling of delay-in- payments and price discounts maximizes the supply chain profit more than when using a single mechanism at a time. The fourth model investigates a two-level supply chain by studying the effects of various scenarios for delay-in-payments when including some environmental costs such as fuel and emissions from manufacturing and transportation. The objective of the model is to optimize the environmental and the economic performance of the supply chain. The results show that delay-in-payments improves the economic and the environmental performance of a supply chain.

Highlights

  • This thesis deals with coordination in a supply chain where the decision-making process is centralized

  • As the retailer settles its payment after receiving the shipment in Case III, the results show that the total cost of the system is insensitive to the retailer's financial and storage holding costs in all models in this case

  • The results showed that offering a mixed trade credit of delay in payment and price discounts increases the total profit of the supply chain

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Summary

Introduction

This thesis deals with coordination in a supply chain where the decision-making process is centralized. It adopts the JELS approach, i.e., determining the size and the number of shipments that minimizes the total supply chain cost. The keywords are the number of levels in a supply chain (supplier, vendor or manufacturer, and buyer), and the trade credit mechanism used (e.g., delay in payments, quantity discounts). The literature is limited to supply chains of three levels (supplier-vendor-buyer). A brief literature review of the types of trade credit applied to supply chain modeling is provided

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