Optimal selection of supply chain financing programmes for a financially distressed manufacturer

Availability of working capital is a challenge for the smooth functioning of any supply chain, particularly when the manufacturer is financially distressed. This gives rise to the issue of selection of optimal sup-ply chain finance programmes. Addressing the limited working capital issue of a financially distressed manufacturer, we construct in this study a Stackelberg game model of a dual-channel supply chain and a multi-echelon supply chain, as an extension, to analyze the effects of reverse factoring and non-reverse factoring (external financing and trade credit) supply chain finance programmes on supply chain profit under price-sensitive demand. We also analyze the impacts of hybrid reverse factoring (an extension of the reverse factoring programme) on supply chain profit. We find that the supply chain finance pro-gramme with reverse factoring brings higher profits to the manufacturer and retailer than the other pro-grammes. However, when the market size is sufficiently large, the trade credit programme generates a higher total supply chain profit than the other programmes. We also find that the retailer and manufac-turer prefer reverse factoring and non-reverse factoring to hybrid reverse factoring, even though the total supply chain profit is almost equal in both cases. We also provide a case study to illustrate the model outcomes. (c) 2022 Elsevier B.V. All rights reserved.