Optimal Operation and Financing Decisions in Green Supply Chain with a Capital-Constrained Manufacturer

Lixin Qiao,Yuanze Sun,Lijuan Xia,Xiaochen Ma,Wei Zhang,Yongli Li

doi:10.1155/2021/7220648

Abstract

Capital constraint, immensely existing in practice, became major stressors for manufacturers during the green research and development (R & D) triggered by managers integrating green concept into their business models. Considering the initial capital of a capital-constrained manufacturer, this paper formulates a Stackelberg game model comprising a manufacturer and a retailer, to discuss the optimal operation and financing decisions under the bank financing channel and trade credit financing channel, to detect the relationship between the manufacturer’s initial capital and green R & D investment, and to find which financing channel is better by comparing the two financing channels when the same initial capital is set. According to the above analysis, the results find that the capital-constrained manufacturer prefers financing only when meeting certain conditions. Furthermore, financing might be detrimental to the manufacturer but always beneficial to the retailer. Especially, under trade credit financing channel, the profit improvement of the retailer is higher than the manufacturer in the same financing channel, which suggests that the retailer has strong internal motivation to cooperate with the manufacturer from the perspective of financing.

Highlights

Nowadays, it is already accepted that the green R & D has become an important way for enterprises to meet market access standards and attain market competitive advantages [1,2,3]
Considering manufacturer initial capital, how does the initial capital effect the green R & D investment and profits of the manufacturer? Comparing bank financing with trade credit financing, which is better for the capital-constrained manufacturer? All the abovementioned issues inspired us to detect the optimal operation and financing decisions of the capital-constrained manufacturer under two available financing channels that are widely applied in practice, and to explore the financing preference of manufacturers in different situations
(1) Considering that many previous researches on green supply chain management assumed that manufacturers have sufficient capital, we extend research to the scenario of capital constraint where the capital-constrained manufacturer is faced with the challenge of integrating green concept into its business. (2) is paper concentrates on the initial capital because more related researches on supply chain financing pay less attention to the initial capital

Summary

Introduction

It is already accepted that the green R & D has become an important way for enterprises to meet market access standards and attain market competitive advantages [1,2,3]. Under the trade credit financing channel, the optimal products’ green degree gT∗, wholesale price wT∗, and retail price pT∗, respectively, are gT∗. Corollary 4 is consistent with Corollary 1; the optimal green degree, wholesale price, and retail price of products increase with the increase of green preference of consumers but decrease with the increase of R & D cost coefficient and early payment discounts rate. Corollary 6 demonstrates the effect of manufacturer’s initial capital on the optimal profit of the manufacturer and retailer under the credit trade financing channel. Erefore, under the bank financing channel, manufacturers demand larger financing to support the increased R & D investment when the initial capital is fixed, because the improvement of product green degree can better meet the green preference of consumers and stimulate greener consumption; the demand is increased. Under the same level of initial capital, the manufacturer prefers trade credit financing to improve revenue

Numerical Analysis

Conclusion and Future Work