A study on green supply chain under capital constraint considering time-varying salvage value

Song Man Wu, Felix T.S. Chan (Corresponding Author), S. H. Chung

Research output: Journal article publicationJournal articleAcademic researchpeer-review

7 Citations (Scopus)


To reduce environmental pollution and promote sustainable development, more and more suppliers are committed to producing more environmentally friendly products such as green electrical appliances through a green supply chain (GSC) system. However, some suppliers are often limited by a lack of funds in the production and supply process. In this paper, buyer-supported purchase order financing (BPOF) and advance payment discount (APD) are adopted to help the supplier successfully produce green products in a GSC system consisting of a financially constrained supplier and a reputable retailer. Moreover, the salvage values of unsold inventory in most traditional models are fixed, but in real life, the salvage value tends to be time dependent. Therefore, how the time-varying salvage value affects the operation and financing decisions as well as the profit risks is studied. We find that the clearance time of the unsold items affects the optimal order quantity and the supplier's discount rate and the financial institution's optimal interest rate. In addition, the financing equilibrium is BPOF under certain conditions, and the profit risks of the retailer and the entire supply chain are increasing with the order quantity and the clearance time. Finally, our results are verified through numerical analysis.

Original languageEnglish
Pages (from-to)8-24
Number of pages17
JournalInternational Journal of Production Research
Issue number1
Publication statusPublished - 4 Oct 2021


  • capital constraint
  • financial management
  • Green supply chain
  • supply chain management
  • time-varying salvage value

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering


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