Buyer-backed purchase-order financing for SME supplier with uncertain yield

نویسندگان

چکیده

Access to adequate working capital is often a challenge for SMEs, especially if SME faces the risk of an uncertain yield. We identify conditions under which strong buyer should either offer “backing” or guarantee purchase-order finance cash-constrained, risky supplier, end relationship. By offering backing, shares default faced by bank, in order keep supplier business. To possible benefits this scheme, we compare buyer’s operational and financial decisions three financing mechanisms: buyer-backed purchase financing, with no backing fixed buyer-backing. The non-linear optimization problem solved using KKT optimality sufficiency established through invexity. perform numerical experiments all models different levels yield risks supplier. are able separate suggest when (1) required; (2) be offered sustain (3) alternative located. find that has following benefits: can use as substitute higher price; it helps stay operative till shock level; shared leads bank at lower rate; finally resulting consistently profits despite added risk. separation condition described above also used managers two suppliers.

برای دانلود باید عضویت طلایی داشته باشید

برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

منابع مشابه

Providing a Model for Financing the Buyer and Supplier in the Supply Chain of Mehrvarzan Healthcare Products Distributor

The present study aims to provide a model for financing buyer-supplier in Mehrvarzan healthcare Company. The statistical population of the study includes 300 employees of the company. According to Morgan table, 168 people are selected as the statistical sample. Available non-random sampling method has been used. For collecting the required information, the standard buyer-supplier financing ques...

متن کامل

Buyer power and supplier incentives

This paper investigates how the formation of larger buyers affects a supplier’s profits and, by doing so, his incentives to undertake non-contractible activities. We first identify two channels of buyer power, which allows larger buyers to obtain discounts. We subsequently examine the effects of buyer power on the supplier’s incentives and on social welfare. Contrary to some informal claims in ...

متن کامل

Supplier Diversification under Buyer Risk

We develop a new theory of supplier diversification based on buyer risk. When suppliers are subject to the risk of buyer default, buyers may take costly action to signal creditworthiness so as to obtain more favorable terms. But once signaling costs are sunk, buyers sourcing from a single supplier become vulnerable to future holdup. Although ex ante supply base diversification can be effective ...

متن کامل

A Model for Selecting Buyer-supplier Relationships

This paper proposes a new method for selecting appropriate buyer-supplier relationships (BSR) for specific projects. Because it is almost impossible in reality to establish mathematical relationships between the BSR attributes and the factors of a project, the concept of relationship indices (RI) is introduced to quantify such BS relationships which are in turn established through design of exp...

متن کامل

ذخیره در منابع من


  با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید

ژورنال

عنوان ژورنال: European Journal of Operational Research

سال: 2023

ISSN: ['1872-6860', '0377-2217']

DOI: https://doi.org/10.1016/j.ejor.2022.09.010