For a supply chain coordination to be effective and profitable, it requires a
working mechanism among its members to entice some players to join a
partnership. Two of the well-known trade credits that are widely used by
businesses are the permissible delay in payments and price discounts. This
thesis presents models for coordinating supply chains with both trade credits.
The first model investigates the effect of utilizing delay in payments in a two-level
(manufacturer-retailer) supply chain. It modifies and analyzes three known
models of different production and shipping policies to account for delays in
payments; it then compares them and highlights the production policy that
performed the best with the total system cost being the performance measure.
The second model analyzes the coordination of a three-level (supplier-manufacturer-
retailer) supply chain with the delay in payments. It analyzes
nine different scenarios of permissible delay among the three players. A simulation
study was performed and a thorough analysis of the results was used to identify
the limitations of all scenarios and to draw some managerial insights and
The third model investigates the effect of coupling permissible delay in payments
and price discounts for coordinating a three-level. The analysis considers nine
different cases of delay-in-payments along with eight cases of price discounts
among the three players in the supply chain, totaling seventy-two cases. The
numerical examples and the sensitivity analyses show that the coupling of delay-in-
payments and price discounts maximizes the supply chain profit more than
when using a single mechanism at a time.
The fourth model investigates a two-level supply chain by studying the effects of
various scenarios for delay-in-payments when including some environmental
costs such as fuel and emissions from manufacturing and transportation. The
objective of the model is to optimize the environmental and the economic
performance of the supply chain. The results show that delay-in-payments
improves the economic and the environmental performance of a supply chain.