Group for Research in Decision Analysis

Buyer finance, supply risk and extended payments

Mohamed Ait Mansour Concordia University, Canada

In this work, we explore the stakeholders' decision depending on the payment term extension and the supplier's production disruption. The proposed is based on a simple supply chain model with one retailer and one capital constrained supplier with disruption production. The retailer determines the intermediary financing contract. The main results: (i) it exists a production disruption threshold which the buyer finance contract is efficient, (ii) the payment-term extension is limited by the supplier's working capital and the supplier's disruption production, (iii) the retailer should balance between payment in advance and payment-term extension to solve the supplier's financial issue.

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