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Trade Credit Term Determination Under Supply Chain Coordination: A Principal-Agent Model

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Book cover Advanced Intelligent Computing Theories and Applications. With Aspects of Theoretical and Methodological Issues (ICIC 2007)

Part of the book series: Lecture Notes in Computer Science ((LNTCS,volume 4681))

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Abstract

Different from previous literature on credit term determination mainly applying financial marginal analysis method, this paper proposes a novel idea to model trade credit term determination as an incentive mechanism design problem under supply chain coordination in principal-agent framework. With application of Schwartz’ financing motive theory, a new form of supplier’s net cost function is derived which makes it possible to find an approximation closed-formed solution to term determination. Using approximation and integration techniques, we find the explicit close-formed approximation solutions to the optimal payment time for the retailer and credit term for the supplier.

This work is financially supported by National Natural Science Foundation of China (Grant No.70502005).

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Authors and Affiliations

  1. School of Economics & Management, Beijing University of Aeronautics and Astronautics, 100083 Beijing, PRC

    Xiao-Jun Shi & Fang-Fei Zhu

  2. Institute of Electronics, Chinese Academy of Science, 100083 Beijing, PRC

    Zhen-Xia Zhang

Authors
  1. Xiao-Jun Shi
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  2. Zhen-Xia Zhang
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  3. Fang-Fei Zhu
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De-Shuang Huang Laurent Heutte Marco Loog

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Shi, XJ., Zhang, ZX., Zhu, FF. (2007). Trade Credit Term Determination Under Supply Chain Coordination: A Principal-Agent Model. In: Huang, DS., Heutte, L., Loog, M. (eds) Advanced Intelligent Computing Theories and Applications. With Aspects of Theoretical and Methodological Issues. ICIC 2007. Lecture Notes in Computer Science, vol 4681. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-74171-8_7

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  • DOI: https://doi.org/10.1007/978-3-540-74171-8_7

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-540-74170-1

  • Online ISBN: 978-3-540-74171-8

  • eBook Packages: Computer ScienceComputer Science (R0)

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