Abstract
In the supply chain financing (SCF) system composed of a capital-constrained retailer, a supplier and a commercial bank, we design two different limited financing modes (internal financing and external financing) based on the retailer’s collateral assets. A newsvendor-like retailer has a single opportunity to order goods from a supplier to satisfy future uncertain demand. In the presence of bankruptcy risk for the retailer, we model their strategic interaction as a Stackelberg game with the supplier as the leader and analyze the optimal decisions for each participant. Regardless of which financing mode is chosen, the capital-constrained retailer orders fewer goods if the financing cost is relatively high. In addition, when the market demand obeys the uniform distribution, if the retailer possesses more collateral assets, he will enjoy a lower loan interest rate and increase order quantity gradually. Moreover, compared with the internal financing mode, each participant obtains the larger expected profits under the external financing mode.
Highlights
In recent years, financing difficulties have been obsessed with small and medium enterprises (SMEs) [1]
The study of Archibald has proved that it is difficult for small companies to survive if they are not able to raise funds what they need [3]. This issue can be addressed if SMEs get financing service, so the new value will be created in the supply chain [2]
Basing on a broad literature, our work aims to examine whether the retailer’s fixed asset influence the lending rate or not in different financing modes, give operational decisions of each participant as well as compare the supply chain performance of two different modes
Summary
In recent years, financing difficulties have been obsessed with small and medium enterprises (SMEs) [1]. The study of Archibald has proved that it is difficult for small companies to survive if they are not able to raise funds what they need [3] This issue can be addressed if SMEs get financing service, so the new value will be created in the supply chain [2]. We address these questions by designing two different financing modes and making comparisons between them from the point of view of ordering decision to explore which mode is more suitable to the retailer. In this supply chain, a supplier sells goods to a newsvendor retailer facing uncertain demand.
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