The risk-sharing role of trade credit in supply chains

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  • Kühne Logistics University (Grosser Grasbrook 17, 20457 Hamburg)
  • Research Seminar Series
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Prof. John R. Birge

Professor

University of Chicago Booth School of Business

Abstract

Trade credit represents the dominant form of short-term financing across firms. Many theories have been proposed for this phenomenon including the relative financial, monitoring, or distributional advantages of the firms and quality control.  This talk will describe a model with a risk-sharing incentive for trade credit in which the suppliers' extension of trade credit coordinates supply chain production by balancing demand risk between supplier and buyer.  The model  suggests that short-term debt is only used during periods of peak financing needs and that, in general, lower priority for trade credit should improve chain efficiency.  Empirical results support these two observations.

About the Presenter

John R. Birge is the Jerry W. and Carol Lee Levin Professor of Operations Management at the University of Chicago Booth School of Business. Previously, he was Dean of the McCormick School of Engineering and Applied Science and Professor of Industrial Engineering and Management Sciences at Northwestern University. He also served as Professor and Chair of Industrial and Operations Engineering at the University of Michigan and established the University of Michigan Financial Engineering Program. He is former Editor-in-Chief of Mathematical Programming, Series B and former President of INFORMS. He has received many honors and awards including the IIE Medallion Award, the INFORMS Fellows Award, the Harold W. Kuhn Prize, the George E. Kimball Medal, the William Pierskalla Award, and election to the US National Academy of Engineering. He received M.S. and Ph.D. degrees from Stanford University in Operations Research, and an A.B. in Mathematics from Princeton University.

more info about Prof. John Birge

About the Seminar

The KLU research seminar series is a regular meeting of PhD students, Post-Docs and professors who conduct research in the field of logistics and supply chain management. The research seminar is open to the public and we happily welcome guests.