A Dynamic Analysis of Supply Chain Risk Management and Extended Payment Terms

In this study, we employ system dynamics to study the combined effect of extended payment terms and a buyer's supply risk management practices on two outcomes: the supplier's bankruptcy risk and the buyer's financial bottom line. In conjunction with payment terms, we model the impact of two commonly recommended supply chain risk management (SCRM) practices: quick response to supply disruptions and use of a secondary (backup) source. Among other...