| Article ID: | iaor20124944 |
| Volume: | 12 |
| Issue: | 3 |
| Start Page Number: | 334 |
| End Page Number: | 353 |
| Publication Date: | Jul 2012 |
| Journal: | International Journal of Logistics Systems and Management |
| Authors: | Basu Preetam, Nair Suresh K |
| Keywords: | combinatorial optimization, finance & banking |
Recent breakthroughs in Business‐to‐Business (B2B) trade have opened new avenues for value creation in the financial supply chains. Based on supply chain event triggers, innovative financing is being provided at different points of the supply chains. This new phenomenon, termed as Supply Chain Finance (SCF), is transforming Working Capital Management (WCM). In this study we focus on payables management of a buying firm in a supply chain with SCF enabled early payment program in place. A stochastic dynamic programming model is developed and the value of SCF enabled early payment program under varying future cash‐flows are ascertained through extensive numerical analysis.