optimal pricing shipment and payment policy for an integrated supplier buyer inventory model with two part trade credit abstract in this article we develop an integrated supplier buyer inventory model with the assumption that the market demand is sensitive to the retail price and the supplier adopts a trade credit policy the trade credit policy discussed in this paper is a two part strategy cash discount and delayed payment that is if the buyer pays within m1 the buyer receives a cash discount otherwise the full purchasing price must be paid before m2 where m 2 m 1 0 the objective of this research is to determine the optimal pricing ordering shipping and payment policy to maximize the joint expected total profit per unit time an iterative algorithm is established to obtain the optimal strategy furthermore numerical examples and sensitivity analysis are presented to illustrate the results of the proposed model and to draw managerial insights

a note on optimal ordering policy for stock dependent demand under progressive payment scheme in a recent paper soni and shah soni h shah n h 2008 optimal ordering policy for stock dependent demand under progressive payment scheme european journal of operational research 184 1 91 100 developed a model to find the optimal ordering policy for a retailer with stock dependent demand and a supplier offering a progressive payment scheme to the retailer this note corrects some errors in the formulation of the model of soni and shah it also extends their work by assuming that the credit interest rate of the retailer may exceed the interest rate charged by the supplier numerical examples illustrate the benefits of these modifications

inventory and credit decisions for time varying deteriorating items with up stream and down stream trade credit financing by discounted cash flow analysis abstract in today s competitive markets most firms in united kingdom and united states offer their products on trade credit to stimulate sales and reduce inventory trade credit is calculated based on time value of money on the purchase cost i e discounted cash flow analysis recently many researchers use discounted cash flow analysis only on the purchase cost but not on the revenue which is significantly larger than the purchase cost and the other costs for a sound and rigorous analysis we should use discounted cash flow analysis on revenue and costs in addition expiration date for a deteriorating item e g bread milk and meat is an important factor in consumer s purchase decision however little attention has been paid to the effect of expiration date hence in this paper we establish a supplier retailer customer supply chain model in which a the retailer receives an up stream trade credit from the supplier while grants a down stream trade credit to customers b the deterioration rate is non decreasing over time and near 100 percent particularly close to its expiration date and c discounted cash flow analysis is adopted for calculating all relevant factors revenue and costs the proposed model is an extension of more than 20 previous papers we then demonstrate that the retailer s optimal credit period and cycle time not only exist but also are unique thus the search of the optimal solution reduces to a local one finally we run several numerical examples to illustrate the problem and gain managerial insights

recent developments in consumer credit risk assessment consumer credit risk assessment involves the use of risk assessment tools to manage a borrower s account from the time of pre screening a potential application through to the management of the account during its life and possible write off the riskiness of lending to a credit applicant is usually estimated using a logistic regression model though researchers have considered many other types of classifier and whilst preliminary evidence suggest support vector machines seem to be the most accurate data quality issues may prevent these laboratory based results from being achieved in practice the training of a classifier on a sample of accepted applicants rather than on a sample representative of the applicant population seems not to result in bias though it does result in difficulties in setting the cut off profit scoring is a promising line of research and the basel 2 accord has had profound implications for the way in which credit applicants are assessed and bank policies adopted

pricing and lot sizing decisions for perishable goods when demand depends on selling price reference price product freshness and displayed stocks abstract price is an important factor affecting demand rate based on economic and marketing theory in addition today s health conscious consumers prefer a product further from its expiration date because it is fresher and can be stored longer furthermore a large display of goods in a supermarket induces customers to buy more due to its visibility variety and seasonality as a result we develop a joint pricing and lot sizing model for retailers selling perishable products in which the demand depends on not only the selling price and reference price but also the product freshness linked to expiration date and displayed stock level we then formulate the problem as a deterministic model in which the retailer determines the optimal selling prices and ending inventory levels to maximize the discounted total profit furthermore we discuss the retailer s optimal decisions under two scenarios of demand behavior loss neutrality and loss aversion our theoretical analysis shows that the optimal pricing and ending inventory level strategies are both monotonic in time and the equilibrium of the system is unique for these two scenarios of demand behavior finally a set of structural properties and sensitivity analysis is also developed to characterize the impacts of model parameters on the optimal decisions

the effects of human resource management practices on productivity a study of steel finishing lines the authors investigate the productivity effects of innovative employment practices using data from a sample of thirty six homogeneous steel production lines owned by seventeen companies the productivity regressions demonstrate that lines using a set of innovative work practices which include incentive pay teams flexible job assignments employment security and training achieve substantially higher levels of productivity than do lines with the more traditional approach which includes narrow job definitions strict work rules and hourly pay with close supervision their results are consistent with recent theoretical models which stress the importance of complementarities among work practices

integrated inventory models considering the two level trade credit policy and a price negotiation scheme abstract this paper develops the integrated inventory models with permissible delay in payment in which customers demand is sensitive to the buyer s price the models consider the two level trade credit policy in the vendor buyer and buyer customer relationships in supply chain management a simple recursive solution procedure is proposed for the integrated models to determine the buyer s optimal pricing and production order strategy although the total profit from the buyer and vendor increases together the buyer s share lessens to compensate the buyer s loss due to the cooperative relationship a negotiation system is presented in order to allocate the profit increase to the vendor and buyer to determine the pricing and production order strategy a numerical example and sensitivity analysis are provided to illustrate the proposed model the results indicate that the total profit from the buyer and vendor together can increase although a price discount is given to the buyer in the proposed models

a pure financial explanation for trade credit this paper provided a pure financial explanation for the existence of trade credit and for the values of the credit terms offered to customers two motives for extending trade credit were identified the pure operating flexibility motive arises because the opportunity to change credit policy provides the seller an efficient way to respond to fluctuations in demand this motive was eliminated from consideration in this paper by assuming constant demand the seller must hold a liquid reserve when the financial markets are imperfect and the desire to earn an excess rate of return on this reserve explains the pure financial intermediary motive for trade credit the pure financial incentive to lend this liquid reserve to customers was examined by viewing a market borrowing rate of interest that exceeds the market lending rate of interest as a hindrance to trade or equivalently as a financial market tariff this tariff imposes a wedge between the market prices paid and received for the product plus a loan and thereby inflicts a loss of surplus on the seller and buyers trade credit lending enables the seller and or the buyers to recapture at least part of this loss when the source of the tariff does not apply to direct loans to customers financial market tariffs caused by transactions costs fulfill this requirement because the trade credit lender s familiarity with its customers and product provide it with information and collection cost advantages over financial intermediaries tariffs caused by financial intermediary rents fulfill this requirement as well because the parties to a trade credit loan do not employ the services of a financial intermediary increasing opportunity costs and financial market imperfections in addition to the ones described above establish the limits of credit policy the optimal amount of accounts receivable is derived from the condition that the marginal revenue of trade credit lending is equal to the marginal cost this condition combined with factoring costs produces a unique finite optimal credit period accrual accounting for income tax purposes imposes an additional restriction because the firm is taxed on the recovery of its opportunity costs these limitations on credit policy were examined separately in this paper for clarity but they are in effect simultaneously in practice

designing supply contracts contract type and information asymmetry this paper studies the value to a supplier of obtaining better information about a buyer s cost structure and of being able to offer more general contracts we use the bilateral monopoly setting to analyze six scenarios three increasingly general contracts wholesale pricing schemes two part linear schemes and twopart nonlinear schemes each under full and incomplete information about the buyer s cost structure we allow both sides to refuse to trade by explicitly including reservation profit levels for both for the supplier this is implemented through a cutoff policy we derive the supplier s optimal contracts and profits for all six scenarios and examine the value of information and of more general contracts our key findings are as follows first the value of information is higher under two part contracts second the value of offering two part contracts is higher under full information and third the proportion of buyers the supplier will choose to exclude can be substantial

what makes workers happy this article answers the question what makes workers happy it does so by combining insights from micro economics sociology and psychology basis is the standard utility function of a worker that includes income and hours of work and is elaborated with job characteristics in this way it is possible to answer whether part time workers are happier than full time workers the utility function is estimated on basis of the european social survey 2004 which contains all necessary information the results show that workers optimize income and hours of work as predicted by micro economics but also that part time workers are happier than full time workers challenging work with a high level of autonomy makes the workers happy work pressure makes workers unhappy higher educated workers are unhappier than lower educated workers we find a negative effect of education but this is compensated by the type of jobs these higher educated hold

accounts receivable management policy theory and evidence this paper develops and tests hypotheses that explain the choice of accounts receivable management policies the tests focus on both cross sectional explanations of policy choice determinants as well as incentives to establish captives we find size concentration and credit standing of the firm s traded debt and commercial paper are each important in explaining the use of factoring accounts receivable secured debt captive finance subsidiaries and general corporate credit we also offer evidence that captive formation allows more flexible financial contracting however we find no evidence that captive formation expropriates bondholder wealth firms typically sell merchandise on credit rather than requiring immediate cash payment such credit sales generate accounts receivable although credit terms and credit collection procedures have been studied see smith 1980 there has been little systematic analysis of the organizational and financial structures employed to manage the firm s accounts receivable these decisions merit more careful attention for two reasons first receivables are a substantial fraction of corporate assets for example 1986 compustat data indicate that accounts receivable are 21 0 of u s manufacturing corporations total assets second we observe substantial diversity in firms use of specialized contracts and intermediaries in their accounts receivable management policies firms can 1 establish a captive finance subsidiary 2 issue accounts receivable secured debt 3 factor 4 employ a credit reporting firm 5 retain a credit collection agency or 6 purchase a credit insurance policy 1 in this paper we demonstrate that accounts receivable management policy offers opportunities for both the development of a robust theory as well as empirical testing of the theory s implications although the data necessary to

the wage effects of high performance work organization in manufacturing an unresolved question about now widespread innovative work systems such as teams and quality programs is whether they influence wage determination this study examines that possible association in manufacturing the author uses data from the 1997 national establishment survey that allow examination of how new work systems affected not only employees who were directly involved in them but other workers as well the key finding is that for core blue collar manufacturing employees higher wages were associated with high performance work organization hpwo systems while higher skill levels and computer based technologies were associated with higher wages the key mechanism appears to have been productivity gains independent of skill and technology that were shared via various across the board wage payment systems hpwo systems appear to have increased managers wages as well although through different channels the author finds no evidence that hpwo related wage gains led to greater wage inequality amon

evidence on the determinants of credit terms used in interfirm trade trade credit is created whenever a supplier offers terms that allow the buyer to delay payment in this paper we document the rich variation in interfirm credit terms and credit policies across industries we examine empirically the firm s basic credit policy choices whether to extend credit or to require cash payment and if credit is extended whether to adopt simple net terms or terms with discounts for prompt payment we also examine determinants of variations in two part terms results are supportive primarily of theories that explain credit terms as contractual solutions to information problems concerning product quality and buyer creditworthiness trade credit has important economic significance from both micro and macroeconomic perspectives during the 1990s vendor financing has accounted for an average 1 5 trillion of the book value of all assets of u s corporations and has represented approximately 2 5 times the combined value of all new public debt and primary equity issues during a given year as a component of the money supply trade credit in the form of accounts payable exceeds the primary money supply mi by a factor of 1 5 on average 1 clearly efforts to control economic growth through monetary policy can be confounded by aggregate decisions of businesses to increase or decrease reliance on trade credit financing several recent empirical studies examine determinants of firm reliance on trade credit 2 these studies model supply and demand for trade credit using financial statement data accounts receivable and payable 3 however many aspects of trade credit practice are unexplored most notably little is known about the types of credit terms e g net 30 2 10 net 30 and credit policies that are observed across firms and industries the only comprehensive doc

the optimal ordering policy of the eoq model under trade credit depending on the ordering quantity from the dcf approach abstract this paper discusses the optimum order quantity of the eoq model that is not only dependent on the inventory policy but also on firm credit policy here the conditions of using a discounted cash flows dcf approach and trade credit depending on the quantity ordered are discussed we consider that if the order quantity is less than at which the delay in payments is permitted the payment for the item must be made immediately otherwise the fixed trade credit period is permitted this paper incorporates all concepts of a discounted cash flows dcf approach trade credit and the quantity ordered and develops a new inventory model to generalize chung chung k h 1989 inventory control and trade credit revisited journal of the operational research society 40 495 498

the exploitation of relationships in financial distress the case of trade credit this paper develops optimal pricing lending and renegotiation strategies for companies in relationships where one firm is highly dependent on the other long term trade creditor firm relationships induce dependent trade creditors to grant more concessions in debt renegotiations than nondependent creditors anticipating these larger renegotiation concessions not only do less financially stable firms prefer trade credit but all firms agree to pay a higher interest rate for trade credit the model also explains the existence of teaser interest rates and convenience classes findings are consistent with those of the relationship lending literature

supply chain coordination for the joint determination of order quantity and reorder point using credit option abstract decisions regarding order quantity and reorder point are two major challenges in supply chain inventory management in this paper a coordination model of the joint determination of these two decision variables is proposed a decentralized supply chain consisting of one buyer and one supplier in a multi period setting is investigated demand and lead times are uncertain in our model an incentive scheme based on credit option has been developed to encourage the buyer to participate in the coordination model in this model the downstream member has the option of using credit to purchase goods during the credit time subject to its commitment to a jointly agreed order quantity and reorder point the credit time is determined in such a way that the two parties have incentives to participate the proposed incentive scheme can share the benefits of coordination between the two members based on their bargaining power the proposed model shows that the coordination of the reorder point together with order quantity can increase the overall chain profitability as well as each member s profitability

quantitative methods in credit management a survey many static and dynamic models have been used to assist decision making in the area of consumer and commercial credit the decisions of interest include whether to extend credit how much credit to extend when collections on delinquent accounts should be initiated and what action should be taken we survey the use of discriminant analysis decision trees and expert systems for static decisions and dynamic programming linear programming and markov chains for dynamic decision models since these models do not operate in a vacuum we discuss some important aspects of credit management in practice e g legal considerations sources of data and statistical validation of the methodology we provide our perspective on the state of the art in theory and in practice

a review of trade credit literature opportunities for research in operations abstract trade credit arises when a buyer delays payment for purchased goods or services its nature has predominantly been an area of inquiry for researchers from the disciplines of finance marketing and economics but it has received relatively little attention in other domains in our article we provide an integrative review of the existing literature and discuss conflicting study outcomes we organize the relevant literature into seven areas of inquiry and analyze four in detail trade credit motives order quantity decisions credit term decisions and settlement period decisions additionally we derive a detailed agenda for future research in these areas

optimal strategy for an integrated system with variable production rate when the freight rate and trade credit are both linked to the order quantity abstract this paper presents an integrated inventory model with variable production rate and price sensitive demand rate the buyer s purchases trade credit linked to the order quantity offered by the supplier in addition the buyer pays the freight charge according to a weight schedule this paper attempts to offer a best policy that aims at maximizing the joint total profit while the trade credit and freight rate are simultaneously linked to the order quantity the same policy also incorporates considerations on the optimal retail price order quantity and delivery decision we provide possible solutions for the buyer and the supplier to collaboratively agree on inventory control warehouse management transportation logistics delivery and billing our study demonstrates that significant profit increase for the entire supply chain can be achieved by linking both trade credit policy and freight rate policy to order quantities an algorithm is furnished to determine the optimal solution in addition numerical examples and sensitivity analysis are presented to illustrate the theoretical results

optimal ordering policy for stock dependent demand under progressive payment scheme abstract in this article a mathematical model is developed to formulate optimal ordering policies for retailer when demand is partially constant and partially dependent on the stock and the supplier offers progressive credit periods to settle the account the notion of progressive credit period is as follows if the retailer settles the outstanding amount by m the supplier does not charge any interest if the retailer pays after m but before second period n offered by the supplier then the supplier charges the retailer on the un paid balance at the rate ic 1 if the retailer settles the account after n then he will have to pay at interest rate ic 2 on the un paid balance ic 2 ic 1 the cost minimization is considered to be an objective function an algorithm is given to find the flow of optimal ordering policy a numerical illustration is given to study the effect of various parameters on ordering policy and total cost of an inventory system

trade credit and informational asymmetry commonly used trade credit terms implicitly define a high interest rate that operates as an efficient screening device where information about buyer default risk is asymmetrically held by offering trade credit a seller can identify prospective defaults more quickly than if financial institutions were the sole providers of short term financing the information is valuable in cases where the seller has made nonsalvageable investments in buyers since it enables the seller to take actions to protect such investments traditional explanations for the widespread use of trade credit fall into two categories the financing motive holds that capital market imperfections enable sellers to finance buyer purchases at lower cost than financial institutions ferris 4 argues that trade credit provides payment flexibility and thus reduces the overall need for buyers and sellers to maintain precautionary balances emery 3 contends that noncompetitive rents of financial institutions can be circumvented by sellers and buyers through provision of trade credit however the financing motive is not sufficient to explain why small suppliers offer trade credit the wide cross sectional variation in terms or why large buyers often take the prompt payment discount late a second set of explanations is best described as pricing motivations for trade credit provision nadiri 10 argues that availability of alternative payment terms can increase product demand but does not indicate why the offered terms could not be duplicated by financial institutions schwartz and whitcomb 14 argue that trade credit is used to circumvent robinson patman and similar prohibitions on price discrimination the correctness of this position depends on the charge to users of trade credit exceeding the cost of provision by the seller although the explanation is possible in principle an empirical question remains as to why variations in actual credit terms appear to be based on product market rather than buyer characteristics the literature also contains analyses of the impact of changing macroeconomic conditions on trade credit terms and aggregate credit flows schwartz 13 for example employs a financing motive for trade credit to conclude that restrictive monetary policy can be partly mitigated by liberalization of trade credit terms by firms with relatively easy access to capital markets however a microeconomic

the effect of information technology on it facilitated coordination it facilitated autonomy and decision makings at the individual level abstractthe effect of information technology it has been a central concern to economics of it ever since it has been viewed as an important resource to improve firm productivity although significant research progress has been made on the impacts of it use at the individual level the mechanism of how it use increases individual performance at work has not been fully explored in an attempt to examine the it effects on performance we focus on individual work productivity gained from it use following the discussion of previous works we develop a research model describing that the ubiquitous it transforms the way individual employers work in organizations and facilitates working processes and practices that may affect the decision making of individual performance as a result of testing the research model we found not only that it use does have a direct effect on the quality of decision making in organizations but that this effect is partially mediated by the extent of it facilitated autonomy and o

an inventory model under inflation for deteriorating items with stock dependent consumption rate and partial backlogging shortages abstract in this paper we extend teng j t chang h j dye c y hung c h 2002 an optimal replenishment policy for deteriorating items with time varying demand and partial backlogging operations research letters 30 6 387 393 and hou k l 2006 an inventory model for deteriorating items with stock dependent consumption rate and shortages under inflation and time discounting european journal of operational research 168 2 463 474 by considering an inventory lot size model under inflation for deteriorating items with stock dependent consumption rate when shortages are partial backlogging the proposed model allows for 1 partial backlogging 2 time varying replenishment cycles and 3 time varying shortage intervals consequently the proposed model is in a general framework that includes numerous previous models as special cases we then prove that the optimal replenishment schedule exists uniquely and provide a good estimate for finding the optimal replenishment number furthermore we briefly discuss some special cases of the proposed model related to previous models finally numerical examples to illustrate the solution process and some managerial implications are provided

an incentive compatible solution for trade credit term incorporating default risk abstract this paper studies the optimal trade credit term decision in an extended economic ordering quantity eoq framework that incorporates a default risk component a principal agent bilevel programming model with costs minimization objectives is set up to derive the incentive compatible credit term the supplier determines the credit term as the leader in the first level programming by balancing her his financing capacity with the retailer s default risk order behavior and cost shifting at the second level the retailer makes decisions on ordering and payment time by reacting on the term offered by the supplier a first order condition solution procedure is derived for the bilevel programming when credit term is confined within the practically feasible interval two key results are obtained the condition to derive incentive compatible credit term and an equation system to derive threshold default risk criterion filtering retailers suitable for credit granting numerical experiments show that the capital cost of the supplier is the most important factor determining the credit term default risk acts like a filtering criterion for selecting retailers suitable for credit granting empirical evidence supporting our theoretical considerations is obtained by estimating three panel econometric models using a dataset from china s listed companies

the solow productivity paradox what do computers do to productivity 1 you don t see computers everywhere in a meaningful economic sense computers and information processing equipment are a relatively small share of gdp and of the capital stock 2 you only thinkyou see computers everywhere government hedonic price indexes for computers fall too fast according to this position and therefore measured real computer output growth is also too fast 3 you may not see computers everywhere but in the industrial sectors where you most see them output is poorly measured examples are finance and insurance which are heavy users of information technology and where even the concept of output is poorly specified 4 whether or not you see computers everywhere some of what they do is not counted in economic statistics examples are consumption on the job convenience better user interface and so forth 5 you don t see computers in the productivity statistics yet but wait a bit and you will this is the analogy with the diffusion of electricity the idea that the productivity implications of a new technology are only visible witlh a long lag 6 you see computers everywhere but in the productivity statistics because computers are not as productive as you think here there are many anecdotes such as failed computer system design projects but there are also assertions from computer science that computer and software design has taken a wrong turn 7 there is no paradox some economists are counting innovations and new products on an arithmetic scale when they should count on a logarithmic scale

an eoq model with noninstantaneous receipt and exponentially deteriorating items under two level trade credit abstract this paper considers the impact of the trade credit policy on the classical economic production quantity epq model for an item subject to exponential decays essentially this study focuses on an exponentially deteriorating item under the conditions of the retailer receiving the supplier trade credit and providing the customer trade credit simultaneously so as to minimize the average total cost a theorem is developed to determine the optimal replenishment policies the main contribution to literature is the inclusion of the latter type of payment delay finally through numerical examples sensitive analysis shows the influence of key model parameters

review of inventory systems with deterioration since 2001 abstract this paper presents an up to date review of the advances made in the field of inventory control of perishable items deteriorating inventory the last extensive review on this topic dates back to 2001 goyal s k and giri b c recent trends in modeling of deteriorating inventory european journal of operational research 134 1 16 since then over two hundred articles on this subject have been published in the major journals on inventory control indicating the need for a new review we use the classification of goyal and giri based on shelf life characteristics and demand characteristics contributions are highlighted by discussing main system characteristics including price discounts backordering or lost sales single or multiple items one or two warehouses single or multi echelon average cost or discounted cash flow and payment delay

coordination and profit sharing between a manufacturer and a buyer with target profit under credit option several studies have focused on buyer vendor coordination through quantity discount credit option mechanism but few quantitative models and investigations are available that have explored the mechanism for transfer of surplus generated due to coordination in this paper we develop a coordination mechanism through credit option such that both the parties can divide the surplus equitably after satisfying their own profit targets two situations are explored here in the first situation both the parties have no individual profit target from the business whereas in the second situation there are individual profit target for both the parties the proposed mechanism for division of surplus is studied through a numerical study and the impact of different parameter values on the results are examined

optimal inventory policy with noninstantaneous receipt under trade credit abstract in the last two decades the models for inventory replenishment policies under trade credit have been widely studied by several researchers however the extant papers only consider the effects of permissible delay in payments in the inventory systems in some situations the supplier also may offer a cash discount to encourage retailer to pay for his purchases quickly on the other hand an inventory model with instantaneous receipt is not a common feature in actual practice for generality this study develops an inventory model with noninstantaneous receipt under trade credit in which the supplier provides not only a permissible delay but also a cash discount to the retailer we then characterize the optimal solution and provide an easy to use criterion to find the optimal order strategies finally several numerical examples are presented to illustrate the theoretical results

trade credit and credit rationing asymmetric information between banks and firms can preclude financing of valuable projects trade credit alleviates this problem by incorporating in the lending relation the private information held by suppliers about their customers incentive compatibility conditions prevent collusion between two of the agents e g the buyer and the seller against the third e g the bank consistent with the empirical findings of petersen and rajan 1995 firms without relationships with banks resort more to trade credit and sellers with greater ability to generate cash lows provide more trade credit finally small firms react to monetary contractions by using trade credit consistent with the empirical results of nilsen 1994 article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the viewpoint on optimal inventory policy with non instantaneous receipt under trade credit by ouyang teng chuang and chuang abstract ouyang et al 2005 international journal of production economics 98 290 300 develop an inventory model with non instantaneous receipt under trade credit in which the supplier provides not only a permissible delay but also a cash discount to the retailer they establish a criterion to find the optimal order cycle such that the total relevant cost per unit time is minimized although their inventory model is correct and interesting their solution procedure has shortcomings such that it cannot locate all optimal order cycles so the main purpose of this paper will remove the shortcoming of ouyang et al 2005 and present a solution procedure to search for the entirely optimal order cycles furthermore this paper reveals an example to show that ouyang et al s 2005 solution procedure does not work for locating the optimal order cycle to that example however our solution procedure does in sum this paper improves ouyang et al 2005

trade credit and productive efficiency in developing countries abstract in developing countries credit shortages are often so severe as to impact a firm s day to day production decisions using firm level data from five african countries i show supplier credit is positively correlated with capacity utilization the result continues to hold when credit access is instrumented using supplier characteristics i claim that this is because firms lacking credit likely face inventory shortages leading to lower rates of capacity utilization this explanation yields several further predictions that are supported by the data there is a positive relationship between supplier credit and inventory holdings moreover raw materials stockouts are positively correlated with capacity utilization particularly in inventory intensive industries

integrated vendor buyer cooperative inventory models with variant permissible delay in payments abstract the integrated inventory models usually have the advantage of reducing total cost however the way to allocate the cost savings from the integration to the buyer and vendor is critical to the success of the joint relationship between both sides to deal with this problem this paper develops the integrated models with the permissible delay in payments for determining the optimal replenishment time interval and replenishment frequency applying the models and considering the coefficient of negotiation and the maximum delay payment period a simple solution algorithm is presented to resolve the allocation of cost savings in the integration model the coefficient of negotiation is adopted to determine the compromise between the buyer s and vendor s cost savings a numerical example is used to demonstrate the feasibility of the proposed integration models a sensitivity analysis is also conducted to demonstrate some properties using the information from the proposed models the buyer and vendor can achieve an acceptable compromise solution for both sides in the supply chain management

retailer s economic order quantity when the supplier offers conditionally permissible delay in payments link to order quantity abstract trade credit financing is increasingly recognized as an important strategy to increase profitability in inventory management we revisit an economic order quantity model under conditionally permissible delay in payments in which the supplier offers the retailer a fully permissible delay of m periods i e there is no interest charge until m if the retailer orders more than or equal to a predetermined quantity w however if the retailer s order quantity is less than w then the retailer must make a partial payment to the supplier and enjoy a permissible delay of m periods for the remaining balance in this paper we extend the mentioned eoq under conditionally permissible delay in payments to complement some shortcomings of the model by contrast to the differential calculus method we propose a simple arithmetic geometric method to solve the problem furthermore we establish some discrimination terms to identify the unique optimal solution among three alternatives and explain those theoretical results by simply economical interpretations finally we solve several numerical examples to illustrate the theoretical results and obtain some managerial implications

economic production quantity models for deteriorating items with up stream full trade credit and down stream partial trade credit abstract in practice in order to reduce default risks with credit risk customers a seller e g a manufacturer or a retailer frequently requests its credit risk customers to pay a fraction of the purchase amount at the time of placing an order as collateral deposit and then grants a permissible delay on the outstanding balance i e a down stream partial trade credit by contrast the seller usually receives a permissible delay on the entire purchase amount from the supplier i e an up stream full trade credit in this paper we propose an economic production quantity epq model for deteriorating items in a supply chain with both up stream and down stream trade credit financing by using fractional programming results we can prove that the optimal solution not only exists but also is unique moreover we propose three discrimination terms to identify the optimal solution among possible alternatives finally some numerical examples are presented to highlight the theoretical results and managerial insights

supply chain efficiency value creation and the economic crisis an empirical assessment of the european automotive industry 2002 2010 abstract this paper seeks to evaluate the development of supply chain sc efficiency and the resulting impacts on company value in a secondary data analysis of the european automotive industry the trends of cost efficiency and working capital performance in the years 2002 2010 and the resulting value impacts are assessed it is detected that many companies failed to manage cost and working capital in a balanced and value adding way which resulted in considerable value losses the economic crisis is identified as an amplifier but not the major cause of these negative trends originality and value of the paper arise from the scarcity of financial analyses that focus on the car sector or that measure and compare several factors of sc efficiency or value creation

the provision of incentives in firms i ncentives are the essence of economics despite many wide ranging claims about their supposed importance there has been little empirical assessment of incentive provision for workers the purpose of this paper is to critically overview existing work on the provision of incentives since the interests of workers and their employers are not always aligned a large theoretical literature has emphasized how firms design compensation contracts to induce employees to operate in the firm s interest this literature has reached into many areas of compensation and has pointed to a multitude of different mechanisms that can be used to induce workers to act in the interests of their employers these include piece rates options discretionary bonuses promotions profit sharing efficiency wages deferred compensation and so on my objective here is to evaluate this literature in the light of a growing empirical literature on compensation where possible i will address the literature from two perspectives first an underlying assumption of this literature is that individuals respond to contracts that reward performance accordingly i consider whether agents behave in this way and whether these responses are always in the firm s interest second i address whether firms write contracts with these responses in mind in other words do contracts look like the predictions of the theory incentives are provided to workers

willingness to pay for forest property rights and the value of increased property rights security this paper studies the willingness to pay wtp for forest property rights in viet nam we do so by asking respondents to estimate the value of two different forest property rights regimes where only the level of property security differs and all other forest plot characteristics are constant we use this information to identify the value of the property rights security our results reveal that a significant number of individuals are willing to pay for an additional area of forestland but that the amount offered appears to be inadequate to compensate sellers as very few land market transactions actually take place the results further indicate that income relates positively to wtp irrespective of forest property regime wealth age and ethnicity also have an impact on the amount households are willing to pay as expected there was a significant mark up on the more secure right econometric estimates of the difference between the wtp for secure and insecure property rights show that a higher level of female education and household age decrease the difference between the two wtp measures while the difference tends to increase as income improves this has important policy implications as it indicates that households tend to evaluate the property rights institutions differently

an eoq model under retailer partial trade credit policy in supply chain abstract the main purpose of this paper is to investigate the retailer s inventory policy under two levels of trade credit to reflect the supply chain management situation in this paper we assume that the retailer has the powerful decision making right so we extend the assumption that the retailer can obtain the full trade credit offered by the supplier and the retailer just offers the partial trade credit to his her customer then we investigate the retailer s inventory system as a cost minimization problem to determine the retailer s optimal inventory policy under the supply chain management two easy to use theorems are developed to efficiently determine the optimal inventory policy for the retailer we deduce some previously published results of other researchers as special cases finally numerical examples are given to illustrate the theorems and obtain a lot of managerial phenomena

comments on the eoq model under retailer partial trade credit policy in the supply chain abstract huang and hsu 2007 an eoq model under retailer partial trade credit policy in supply chain international journal of production economics doi 10 1016 j ijpe 2007 05 014 investigate the inventory system as a cost minimization problem to determine the retailer s optimal inventory policy under the supply chain they develop two easy to use theorems to locate the optimal inventory policy for the retailer although their inventory models are correct and interesting processes of arguments to derive those theorems to find the optimal inventory policy are not complete so the main purpose of this paper is to overcome these shortcomings and present complete proofs for huang and hsu 2007

optimal price discounting and lot sizing policies for perishable items in a supply chain under advance payment scheme and two echelon trade credits abstract many researchers have assumed that a retailer announces price discount to motivate market sales when he has competition in markets unanticipated surplus in inventory or change in the production run of a product but in real life situations there are retailers who announce price discount offer under advance payment ap scheme prior to the selling period due to the advancement of internet and on line money transactions the ap scheme is common and useful to decrease the estimation error in demand and to increase the market sales when the items are arrived to the inventory the priority will be given to the customers who use ap scheme this paper considers a supply chain where the supplier provides the retailer a full trade credit period for payments whereas the retailer offers the partial trade credit to his customers i intend to develop an economic order quantity eoq based model with perishable items in order to investigate the retailer s inventory system as a cost minimization problem under ap scheme and two echelon trade credit option mathematical theorems are developed to determine optimal price discounting and lot sizing policies and a lot of managerial phenomena are obtained through numerical examples

optimal ordering policies when the supplier provides a progressive interest scheme abstract in fact most credit card issuers or home equity banks frequently offer cardholders or customers a teaser interest rate say i 1 which is significantly lower than the regular interest rate of i 2 with i 2 i 1 for only 6 months or a year say m 2 to lure new customers from their competitors consequently the customer faces a progressive interest charge from the bank if the customer pays the outstanding balance by the grace period say m 1 which is generally 25 days then the bank does not charge any interest if the outstanding amount is paid after m 1 but by m 2 with m 2 m 1 then the bank charges the customer the teaser interest rate of i 1 on the unpaid balance if the customer pays the outstanding amount after m 2 then the bank charges the regular interest rate of i 2 in this paper we first establish an appropriate eoq model for a retailer when the bank or the supplier offers a progressive interest charge and then provide an easy to use closed form solution to the problem

a transactions theory of trade credit use this paper derives a transactions theory of trade credit use from the motives of trading partners to economize on the joint costs of exchange in the formal analysis uncertain delivery time is used to generate a demand by firms to hold inventories of both goods and money trade credit is viewed as a mechanism that separates the exchange of money from the uncertainty present in the exchange of goods by forewarning both trading partners of the timing of money flows credit permits a reduction in precautionary money holdings and the more effective management of net money accumulations

trade credit for supply chain coordination abstract trade credit is a seller s short term loan to the buyer allowing the buyer to delay payment of an invoice it has been the largest source of working capital for a majority of business to business firms in the united states numerous theories have been proposed to explain trade credit mainly from finance perspectives it has also been an important issue in supply chain management surprisingly most literature in supply chain management has examined the retailer s stocking policies given a supplier s trade credit this paper attempts to shed light on trade credit from a supplier s perspective and presents it as a tool for supply chain coordination specifically we explicitly assume firms financial needs for inventory following a newsvendor framework we assume that the supplier grants trade credit and markdown allowance given the supplier s offer the retailer determines order quantity and the financing option for the inventory either trade credit or direct financing from a financial institution our result shows that the supplier s markdown allowance alone cannot fully coordinate the supply chain if the retailer employs direct financing positive financing costs call for trade credit in order to subsidize the retailer s costs of inventory financing using trade credit in addition to markdown allowance the supplier fully coordinates the retailer s decisions for the largest joint profit and extracts a greater portion of the maximized joint profit

on optimal payment time for a retailer under permitted delay of payment by the wholesaler abstract jamal et al 2000 optimal payment time for a retailer under permitted delay of payment by the wholesaler international journal of production economics 66 59 66 study a wholesaler retailer supply chain where the retailer is given a permissible credit period to pay back the dues without paying any interest to the wholesaler the problem is modeled as a cost minimization problem with two decision variables the payment time p of the retailer and the length of the inventory cycle t while the model represents in general an interesting problem we show in this note that there are a number of nontrivial flaws contained in the development of their model and therefore the solution they derived is not correct we give the correct model and derive the corresponding optimal solution

modeling of financial supply chain the research work on supply chain management has primarily focused on the study of materials flow and very little work has been done on the study of upstream flow of money in this paper we study the flow of money in a supply chain from the viewpoint of a supply chain partner who receives money from the downstream partners and makes payments to the upstream partners the objective is to schedule all payments within the constraints of the receipt of the money a penalty is to be paid if payments are not made within the specified time any unused money in a given period can be invested to earn an interest the problem is computationally complex and non intuitive because of its dynamic nature the incoming and outgoing monetary flows never stop and are sometimes unpredictable for tractability purposes we first develop an integer programming model to represent the static problem where monetary in flows and out flows are known before hand we demonstrate that even the static problem is np complete first we develop a heuristic to solve this static problem next the insights derived from the static problem analysis are used to develop two heuristics to solve the various level of dynamism of the problem the performances of all these heuristics are measured and presented

an analysis of the determinants of job satisfaction when individuals baseline satisfaction levels may differ a growing literature seeks to explain differences in individuals self reported satisfaction with their jobs the evidence so far has mainly been based on cross sectional data and when panel data have been used individual unobserved heterogeneity has been modelled as an ordered probit model with random effects this article makes use of longitudinal data for denmark taken from the waves 1995 1999 of the european community household panel and estimates fixed effects ordered logit models using the estimation methods proposed by ferrer i carbonel and frijters 2004 and das and van soest 1999 for comparison and testing purposes a random effects ordered probit is also estimated estimations are carried out separately on the samples of men and women for individuals overall satisfaction with the jobs they hold we find that using the fixed effects approach that clearly rejects the random effects specification considerably reduces the number of key explanatory variables the impact of central economic factors is the same as in previous studies though moreover the determinants of job satisfaction differ considerably between the genders in particular once individual fixed effects are allowed for

optimal trade credit and lot size policies in economic production quantity models with learning curve production costs abstract in reality a seller e g a supplier or a manufacturer frequently offers his her buyers trade credit e g permissible delay in payment trade credit reduces the buyer s holding cost of inventory and hence attracts new buyers who consider it to be a type of price reduction on the other hand granting trade credit also increases the seller s opportunity cost i e the loss of capital opportunity during the credit period and default risk i e the event in which the buyer will be unable to make the required payments on his her debt obligation in addition it is a well known fact of learning by doing that production cost of a new product declines by a factor of from 10 to 50 percent each time the accumulated production volume doubles therefore we propose an economic production quantity model from the seller s prospective to determine his her optimal trade credit period and production lot size simultaneously in which i trade credit increases not only sales but also opportunity cost and default risk and ii production cost declines and obeys a learning curve phenomenon then the necessary and sufficient conditions to obtain the seller s optimal trade credit and order quantity are derived finally we use some numerical examples to illustrate the theoretical results and to provide some managerial insights

an assessment of trends in technology use innovative work practices and employees attitudes in europe several studies of innovative work practices show a positive link with firm performance and employees task involvement organizational commitment and citizenship behaviours one of the recent changes faced by firms is the introduction of information and communication technologies icts although several empirical studies analyse the links between ict use innovative work practices and firm performance employee level analyses are scarce using data from the european working condition survey ewcs this article investigates the relationships between use of the internet and computers and positive attitudes among employees social support job satisfaction extra effort in the european context our empirical results are based on data for more than 9500 employees from 16 european countries in 2005 and more than 14 000 in 2010 among the different effects of ict use based on the results for the 2005 2010 and the pooled 2005 2010 sample and in a within cohorts change analysis we find that internet use

optimal manufacturer s replenishment policies in the epq model under two levels of trade credit policy abstract in 2007 huang proposed the optimal retailer s replenishment decisions in the epq model under two levels of trade credit policy in which the supplier offers the retailer a permissible delay period m and the retailer in turn provides its customer a permissible delay period n with n

optimal replenishment policies for non instantaneous deteriorating items with price and stock sensitive demand under permissible delay in payment abstract this study is motivated by the paper of chang et al international journal of production economics 123 2010 62 68 we extend their inventory model from two aspects 1 the demand rate as multivariate function of price and level of inventory 2 delay in payment is permissible under these assumptions we first formulated a mathematical model and then some useful theoretical results have been derived to characterize the optimal solutions for non zero and zero ending inventory system numerical examples are presented to illustrate the theoretical results the sensitivity analysis of a suitable example is performed and some managerial insights are proposed our analysis revels that it is more beneficial to keep higher inventory level hoping to stimulate more demand even if it results in non zero ending inventory

productivity effects of organizational change microeconometric evidence this paper analyzes the relationship between investment in information and communication technologies ict non ict investment labor productivity and workplace reorganization firms are assumed to reorganize workplaces if the productivity gains arising from workplace reorganization exceed the associated reorganization costs two different types of organizational change are considered enhancement group work and flattening of hierarchies empirical evidence is provided for a sample of 411 firms from the german business related services sector we develop and estimate a model for labor productivity and firms decision to reorganize workplaces that allows workplace reorganization to affect any parameter of the labor productivity equation our general and flexible methodology allows us to properly take account of strategic complementarities between the input factors and workplace reorganization the estimation results show that changes in human resources practices do not significantly affect firms output elasticities with respect to ict non ict capital and labor although most of the point estimates of the individual output elasticities and of the control variables for observable firm heterogeneity are larger if workplace reorganization is realized we therefore apply the kernel density estimation technique and demonstrate that for firms with organizational change theentire labor productivity distribution shifts significantly out to the right if workplace reorganization takes place indicating that workplace reorganization induces an increase in labor productivity that is attributable to complementarities between the various input factors and workplace reorganization by contrast firms without organizational change would not have realized significant productivity gains if they had reorganized workplaces

stackelberg solution in a vendor buyer supply chain model with permissible delay in payments abstract in practice vendors or sellers often offer their buyers a fixed credit period to settle the account the benefits of trade credit are not only to attract new buyers but also to avoid lasting price competition on the other hand the policy of granting a permissible delay adds not only an additional cost but also an additional dimension of default risk to vendors in this paper we will incorporate the fact that granting a permissible delay has a positive impact on demand but negative impacts on both costs and default risks to establish vendor buyer supply chain models then we will derive the necessary and sufficient conditions to obtain the optimal solution for both the vendor and the buyer under non cooperative stackelberg equilibrium finally we will use two numerical examples to show that 1 granting a permissible delay may significantly improve profits for both the vendor and the buyer 2 the sensitivity analysis on the optimal solution with respect to each parameter and 3 the comparisons between nash and stackelberg solutions

an integrated vendor buyer inventory model with order processing cost reduction and permissible delay in payments trade credit plays an important role in financing for many businesses and industries for the buyers purchased inventory can be considered to be financed in whole or in part with permissible delay in payments during the purchasing process on the other hand both the vendor and buyer take part in order processing cost reduction by applying information technologies such as edi electronic data interchange the order processing cost can also be reduced by adding certain capital investments and this will affect the lot size decisions this article develops an integrated inventory model to determine the optimal inventory policy under conditions of order processing cost reduction and permissible delay in payments and shows that the total annual variable cost function possesses some kinds of convexities a solution procedure is provided to determine the optimal order policy finally a numerical example is presented to illustrate the solution procedure

a comprehensive extension of optimal ordering policy for stock dependent demand under progressive payment scheme in a recent paper soni and shah 2008 presented an inventory model with a stock dependent demand under progressive payment scheme assuming zero ending inventory and adopting a cost minimization objective however with a stock dependent demand a non zero ending stock may increase profits resulting from the increased demand this work is motivated by soni and shah s 2008 paper extending their model to allow for 1 a non zero ending inventory 2 a profit maximization objective 3 a limited inventory capacity and 4 deteriorating items with a constant deterioration rate for the resulted model sufficient conditions for the existence and uniqueness of the optimal solution are provided finally several economic interpretations of the theoretical results are also given

interrelating operational and financial performance measurements in inventory control financial supply chain management and working capital management are increasingly receiving attention as important avenues to increase profitability in supply chains by actively managing payment terms and working capital requirements managers can influence financial performance and achieve significant cost savings however measures to improve financial performance implicitly restrict and influence operational performance in our research we elaborate on the benefits of equally considering both operational and financial aspects in decision making for the physical and financial supply chain we develop a mathematical model that determines the optimal purchasing order quantity under working capital restrictions and payment delays we analyze the trade offs between the most commonly used financial and operational measurements such as service level return on investment profit margin and inventory level our results demonstrate the significance of payment delays increases decreases in the upstream downstream payment delays favor the system s operations by decreasing operational costs moreover increases in the working capital employed in the system decrease the total operational cost increase the total financial cost and lower the return on working capital investment c 2009 elsevier b v all rights reserved

lot sizing policies for deteriorating items with expiration dates and partial trade credit to credit risk customers abstract in practice a credit worthy retailer frequently receives a permissible delay on the entire purchase amount without collateral deposits from his her supplier i e an up stream full trade credit by contrast a retailer usually requests his her credit risk customers to pay a fraction of the purchase amount at the time of placing an order and then grants a permissible delay on the remaining balance i e a down stream partial trade credit in addition many products such as blood banks pharmaceuticals fruits vegetables volatile liquids and others deteriorate constantly and have their expiration dates however not many researchers have taken the expiration date of a deteriorating item into consideration the purpose of this paper is to establish optimal lot sizing policies for a retailer who sells a deteriorating item to credit risk customers by offering partial trade credit to reduce his her risk the proposed model is a generalized case of many previous models by applying theorems in pseudo convex fractional functions we can easily prove that the optimal solution not only exists but is also unique moreover we propose three discrimination terms which can easily identify the optimal solution among all possible alternatives finally some numerical examples are presented to highlight the theoretical results and managerial insights

a deterministic eoq model with delays in payments and price discount offers abstract it is the purpose of this paper to model the retailer s profit maximizing strategy when confronted with supplier s trade offer of credit and price discount on the purchase of merchandise generally retailers have to face many types of demands for different kinds of goods in real situation retailers have to correlate between the selling price and supplier s trade offer keeping in mind profit maximization strategy in the proposed model all increasing deterministic demands are discussed analytically numerically and graphically in the environment of permissible delay in payment and discount offer to the retailer

globalization and the connection of remote communities a review of household effects and their biodiversity implications abstract the remote regions of the world provide refuge to a disproportionate amount of the earth s biodiversity as globalization continues isolated human communities in these regions are increasingly connected to global market migration and technology networks we review the diffuse literature on the household effects of changing market access migration and technology adoption in remote regions and implications for native biodiversity market access affects biodiversity in remote communities through changes in household economics and social networks migration either to or from remote settlements affects biodiversity through changes in population remittances human capital and social networks finally we consider effects due to production public infrastructure and information and communication technologies there is much ambiguity surrounding these causal pathways and thus we also examine the roles of various ecological household community and institutional mediating factors in determining the impacts of global connection finally we explore the limitations of our current knowledge and research practices and propose directions for future work to address key uncertainties in theory and evidence as well as weaknesses in methodological approaches we recommend a broad and interdisciplinary mode of inquiry as the best means toward clarifying globalization s impacts on human settlements and the biodiversity harbored in the earth s remaining remote regions

retailer s optimal replenishment decisions with credit linked demand under permissible delay in payments abstract usually it is assumed that the supplier would offer a fixed credit period to the retailer but the retailer in turn would not offer any credit period to its customers which is unrealistic because in real practice retailer might offer a credit period to its customers in order to stimulate his own demand moreover it is observed that credit period offered by the retailer to its customers has a positive impact on demand of an item but the impact of credit period on demand has received a very little attention by the researchers to incorporate this phenomenon we assume that demand is linked to credit period offered by the retailer to the customers this paper incorporates the concept of credit linked demand and develops a new inventory model under two levels of trade credit policy to reflect the real life situations an easy to use algorithm is developed to determine the optimal credit as well as replenishment policy jointly for the retailer finally numerical example is presented to illustrate the theoretical results followed by the sensitivity of various parameters on the optimal solution

a joint approach for setting unit price and the length of the credit period for a seller when end demand is price sensitive this paper considers the seller buyer channel in which the end demand is price sensitive and the seller may offer trade credit to the buyer the unit price seller charged by the seller and the length of the credit period offered by the seller to the buyer both influence the final demand for the product hence we consider both to be policy variables for the seller we use the case of no credit as a benchmark in our analysis the paper provides procedures for determiningthe seller s and the buyer s policies under non cooperative as well as cooperative relationships in the non cooperative case we determine for the seller the optimal unit price and the length of the credit period for the cooperative structure we provide a procedure for characterizingpareto efficient solutions r 2002 elsevier science b v all rights reserved

optimal replenishment policies for non instantaneous deteriorating items with stock dependent demand abstract wu et al 2006 an optimal replenishment policy for non instantaneous deteriorating items with stock dependent demand and partial backlogging international journal of production economics 101 369 384 established an inventory model for non instantaneous deteriorating items with stock dependent demand and obtained the optimal replenishment policy in this paper we first amend wu et al s model by changing the objective to maximizing the total profit secondly we set a maximum inventory level in the model to reflect the facts that most retail outlets have limited shelf space thirdly we relax the restriction of zero ending inventory when shortages are not desirable we then establish the theoretical results and provide an algorithm to find the optimal solution finally we present some numerical examples to illustrate the results

property rights and natural resource management in developing countries this essay surveys the literature on property rights and natural resource management in developing countries focus is on policy relevant discussions concerning collective action property regimes local institutions for natural resource management the evolution of individual property rights to land land titling by government and poverty environment linkages the tendency to draw policy conclusions from simplistic analysis is criticised and the need for more credible empirical research is highlighted

an economic order quantity model for deteriorating items with partially permissible delay in payments linked to order quantity abstract to attract more sales suppliers frequently offer a permissible delay in payments if the retailer orders more than or equal to a predetermined quantity w in this paper we generalize goyal s k 1985 eoq under conditions of permissible delay in payments journal of the operational research society 36 335 338 economic order quantity eoq model with permissible delay in payment to reflect the following real world situations 1 the retailer s selling price per unit is significantly higher than unit purchase price 2 the interest rate charged by a bank is not necessarily higher than the retailer s investment return rate 3 many items such as fruits and vegetables deteriorate continuously and 4 the supplier may offer a partial permissible delay in payments even if the order quantity is less than w we then establish the proper mathematical model and derive several theoretical results to determine the optimal solution under various situations and use two approaches to solve this complex inventory problem finally a numerical example is given to illustrate the theoretical results

supply chain coordination contracts with inventory level and retail price dependent demand abstract in this paper three unlike coordinating contracts namely i joint rebate contract ii wholesale price discount contract and iii cost sharing contract are proposed for two echelon supply chain coordination perspective under stock and price induced demand it is found analytically that the manufacturer s and the retailer s preferences among three contractual forms are not always aligned by applying bargaining theory it is established that stock elasticity plays an important role to select coordination contract and a threshold value stock elasticity is also determined below which cost sharing contract is not feasible it is also found that the retailer with higher bargaining power always prefers wholesale price discount contract among considered three contracts results are illustrated analytically as well as numerically