Paper
Firm's Optimal Inventory Decision Based on Two Level Trade Credit
- Authors:
- Zong Fang
- Abstract
- As an integrated part of goods exchange, trade credit bridges financial and operation decision. For a firm in the middle of credit chain, how to coordinate inventory decision, cash holding with two level trade credit under financial constraints is important. This paper attempts to develop a mathematical model to examine the exact relations between them. By introducing adjusted financial probability coefficient as a key index, results indicate that when the trade credit upstream supplier offers to focal firm is large enough, if adjusted financial distress probability is above some value, optimal inventory holding has no relations with financial distress coefficient. But if the upper bound is little, even if adjusted financial distress coefficient is high, optimal inventory and financial distress coefficient are interrelated.
- Keywords
- optimal inventory decision; trade credit; supply chain
- StartPage
- 40
- EndPage
- 46
- Doi