Supplier chain financing with budget constraint considering option contract and bank loan

In this paper supply chain financing through bank loan and option contract is analyzed. The supplier as a leader announces wholesale price (w), option price 〖(w〗_o) and option exercise price 〖(w〗_e). Then, budget-constrained retailer decides on order quantity, option quantity and the loan amount. All agents are attempting to maximize their own profits. Therefore, using a Stackelberg game, the model is analyzed and the agents’ decisions and profits levels are compared under different scenarios.

Keywords:

Supply chain finance (SCF) , Bank loan , Option contract , Budget-constraint , Stackelberg game