Search

This paper studies the interactions of capital structure and product market competition under two supply chain structures: a distribution structure where two competing retailers source from a common supplier and a parallel structure where each retailer sources from a dedicated supplier. The analyses demonstrate that if the retailers have access to external credits, they will borrow more (less), buy more (less), and incur a higher (lower) default probability under a parallel structure than under a distribution structure if the retailers sell substitutes (complements). The retailers' leverage improves the profit of their upstream suppliers and of the channel but improves their own profits only if they sell complements. If they sell substitutes, borrowing makes them worse off, leading to the prisoner's dilemma phenomenon. If only one retailer has access to external credit, then it will enjoy a leadership premium (loss) if the retailers sell substitutes (complements), and this effect trickles up to the upstream supplier of the leveraged retailer under the parallel structure. Thus, the dedicated suppliers will abet the leveraged retailers to compete more aggressively than unleveraged ones. However, the common supplier is independent of their downstream customer's capital structure. These results reveal that the impacts of external credit on the supply chain profitability depend on the stages the supply chain members are in, the degree of product differentiation, the supply chain structure, the uncertainty of demand, and whether the competitor also has access to external credits. [ABSTRACT FROM AUTHOR]

This paper examines the impact of group purchasing organizations (GPOs) on healthcare-product supply chains. The supply chain we study consists of a profit-maximizing manufacturer with a quantity-discount schedule that is [...]

Various countries' tax laws adopt certain forms of a so-called worldwide tax system which levy taxes on their countries' multinational firms' global incomes at home country tax rates. To avoid double taxation, they permit tax cross-crediting, i.e., a global firm can use excess foreign tax credits (the portion of foreign tax payments that exceed its home country tax liabilities) generated from a subsidiary (located in a high-tax country) to offset the tax obligations from another subsidiary (located in a low-tax country). This article studies a multinational firm's global sourcing decisions at two subsidiaries located in low- and high-tax countries, respectively, with an objective of maximizing its expected worldwide after-tax profit. We characterize the optimal sourcing decisions under various decentralized and centralized after-tax profit-maximizing performance measures. We show that the global firm can devise an easily implementable incentive scheme to optimally coordinate the decentralized sourcing decisions made at the two subsidiaries. We also demonstrate that decentralized policies with after-tax performance measures are more advantageous than the traditional pretax policies when the "tax effects", i.e., the impacts of certain features of the tax laws (such as tax cross-crediting) on supply chain decisions, are significant. [ABSTRACT FROM AUTHOR]

ABSTRACT We consider the problem of balancing the penalties associated with budgetary slack (being underbudget) and cost overruns in the project portfolio selection problem by addressing randomness in project costs and making individual project budgets decision variables. Setting the budget for a single project is shown to be analogous to the newsvendor problem. For related versions of the project portfolio selection problem we provide optimal and heuristic procedures. Numerical experiments are used to test the procedures and provide managerial guidelines. We show project budgets should be set so that each project in the portfolio has the same probability of running over budget, it is better to have a larger number of projects with less than ideal funding compared to a smaller number of projects with ideal funding, and substantial opportunities to select more projects with a higher expected profit are available if an aggregate portfolio budget is used. [ABSTRACT FROM AUTHOR]