A Supplier-Stackleberg Game Model under Two Levels of Trade Credit Considering Default-Risk

Document Type : Research Paper


1 Sardar Vallabhbhai National Institute of Technology, Surat

2 Department of Mathematics, Sardar Vallavbhai National Institute of Technology, Surat, Gujarat, and Department of Applied Science, Haldia Institute of Technology, Haldia, West Bengal.


In the context of a supply chain, individuals engage in cooperative efforts to optimize their financial gains. The present article represents a study of a supply chain model that incorporates a two-level trade credit policy. The model focuses on a scenario where a supplier offers a product with a market demand that is reliant on the credit duration. The study centers on the strategies employed by suppliers to motivate retailers to increase their orders through the use of trade credit, with the aim of maximizing their own profits. The analysis takes into account the influence of credit period-dependent default customers. A set of examples is provided and the sensitivity is studied to show the recommended technique. Finally, the equilibrium solution has been derived from the supplier Stackelberg game and examined using numerical examples in the scenario when the supply offers a higher credit than the retailer. The outcomes of the numerical illustrations indicate that a supplier can achieve greater profitability by electing an adequate range of credit periods. Furthermore, this study demonstrates a significant correlation between the duration of credit, market demand, and the profitability of both the retailer and supplier with the demand coefficient, the price involved in the model, and the coefficient of default risk.


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