Abstract
The current pandemic has disrupted many supply chains, among them food supply chains, and their physical and financial flows. Therefore, companies with high bargaining power may extend their payment terms to downstream suppliers as a reaction to decreased financial cash flow. We model a stylized three-stage food supply chain and use simulation to analyze the effects of a demand shortfall. We then investigate the effects of payment term extensions by different companies. We find that although extending payment terms can be beneficial for a single company in the short run, it will harm the supply chain in the long-run and conclude that incentives should be put into place to motivate companies accordingly.
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Acknowledgements
This research was supported by the German Federal Ministry of Education and Research (BMBF) in the NOLAN project (grant numbers 13N14457 and 13N14459).
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Zienau, A., Alazzeh, M., Hansen, O., Imdahl, C., Wiens, M., Schultmann, F. (2023). Impact Analysis of Extended Payment Terms in Food Supply Chains During a Demand Shortfall. In: Grothe, O., Nickel, S., Rebennack, S., Stein, O. (eds) Operations Research Proceedings 2022. OR 2022. Lecture Notes in Operations Research. Springer, Cham. https://doi.org/10.1007/978-3-031-24907-5_78
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DOI: https://doi.org/10.1007/978-3-031-24907-5_78
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