题目: The Value of Trade Credit under Risk Controls

摘要: Trade credit is widely used by companies to obtain external funds. The extant literature has demonstrated that trade credit benefits the buyer and the supplier in multiple ways, but might still induce various issues. For example, researchers and practitioners have concluded that trade credit might encourage buyers to act aggressively, and hence increase the potential delinquency costs for the supplier when buyers default. In this paper, we focus on the impact of trade credit on growing small businesses and their suppliers. By looking at a one-supplier-one-retailer supply chain under a multiple-period setting, we study the expansion and inventory policies of the retailer with his consideration of risk control, which is critical for any small business. We also take into account the supplier's risk control decision on whether trade credit will be extended, according to the retailer's performance in terms of business size and cash flow. We further numerically mimic various growth scenarios of the retailer depending on the term of trade credit and the wholesale price offered by the supplier. Interestingly, we find that, in contrast to the traditional wisdom, trade credit offered by the supplier can not only increase the profits of both parties, but also reduce the retailer's default risk, as long as the supplier can apply appropriate risk controls. In addition, we show that offering trade credit does not necessarily attract retailers to act aggressively in general. Under the supplier's risk controls, the retailer's growth rate could be quite insensitive with the term of trade credit.

专家简介：Lian Qi is an associate professor and vice chair of department of supply chain management at Rutgers Business School. He received his Ph.D. and M.S. from University of Florida, his M. Eng. from Zhejiang University and his B.S. from Fudan University. His research interests include supply chain design and management, especially supply chain design under stochastic supply disruptions; production and inventory planning and control; operations management; simulation; design and analysis of optimization algorithms. His papers has published outstanding papers on top level journals, such asProduction and Operations Management,Transportation Science,European Journal of Operational Research,Omega, the International Journal of Management Science,International Journal of Production Economics. Dr. Qi is the associate editor ofAsia-Pacific Journal of Operational Researchand also an editorial board member ofMechanical & Electrical Engineering.He was the recipient of Junior Faculty Award and Junior Faculty Research Award at Rutgers Business School, and Outstanding Faculty Award at University of Missouri – Rolla, where he once worked.