Integrated supply chain decisions with credit-linked demand: A Stackelberg approach

Market demand is likely to be aected by the seller's credit in many industrial practices. In this respect, the present study aims to investigate the benecial performance of the supply chain in terms of credit-linked demand. Without loss of generality, this study was conducted under three dierent decision circumstances, namely supplier dominated, retailer dominated, and centralized supply chains. In this paper, a demand model was developed as a function of the trade credit period. While the supplier determines the optimal trade credit period, the retailer determines the optimal replenishment cycle time. In such conditions, rst, optimal solutions were suggested for both centralized and decentralized decisions in a supplier Stackelberg model and a retailer Stackelberg model, respectively. Then, a set of theorems was developed to determine the optimal results. Finally, a numerical example and sensitivity analysis were provided to illustrate the eciency of the proposed models and optimal solutions. The ndings revealed that under the trade credit condition, the supplier-dominated supply chain outperformed the retailer-dominated one. However, in case supplier did not provide the trade credit period, the result would be the opposite.