Advance Purchase Discounts for Supply Chain Finance System Coordination

Sustainability

Roberta Pellegrino¹  Nicola Costantino¹  Danilo Tauro¹ 

[1] Departments of Mechanics, Mathematics and Management, Politecnico di Bari, via Orabona 4, 70126 Bari, Italy;

关键词: supply chain finance;    supply chain coordination;    supply contracts;    advance purchase discount;    option contract;   

DOI  :  10.3390/su122310156

来源: DOAJ

【 摘 要 】

The purpose of this paper is to study how advanced information about customer needs obtained through an Advance Purchase Discount (APD) contract can be exploited to coordinate the capital flow and enhance the efficiency of a two-stage supply chain (SC) under decentralized control in cases of stochastic customer demand. We developed an APD model in the form of an option contract, where the model and evaluation include the flexibility for the upstream firm to decide whether to provide a discount for an advance purchase at its own discretion. Applying the model to a Fortune 100 company, a leader in the Fast Mover Consumer Goods (FMCG) industry, showed that under certain conditions, and with suitably chosen contract parameters, management of decentralized control via APD contracts can lead to system-wide efficiency, and the individual decision makers pursue their own best interests, ensuring a win-win condition.

【 授权许可】

Unknown