Highlights A 3PL firm’s incentive for providing logistics and financial services is studied. The 3PL firm’s interest and freight rates can be substitutable and complementary. Effect of risk preference is more significant under price competition. The 3PL firm is suggested to work with a risk-averse manufacturer.
Abstract This paper considers a third-party logistics (3PL) firm that provides integrated logistics and financial services to a budget-constrained manufacturer with different risk preferences. We adopt a mean–standard deviation objective function to reflect different risk preferences and concentrate on the effects of risk preference and demand volatility. Interestingly, we discover that substitution and complementary effects exist between the interest and freight rates of the 3PL firm. The effects of risk preference and demand volatility on the equilibrium interest rate become more significant when supply chains engage in price competition. Furthermore, we demonstrate that the 3PL firm prefers a risk-averse manufacturer.
Joint logistics and financial services by a 3PL firm: Effects of risk preference and demand volatility
2019-09-12
17 pages
Aufsatz (Zeitschrift)
Elektronische Ressource
Englisch
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