Work

Study on the Selection Strategy of Supply Chain Financing Modes Based on the Retailer’s Trade Grade

Year: 2018

Type: article

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.

Source: Sustainability

DOI: 10.3390/su10093045

Authors: Jianjun Yu, Dan Zhu

Institution: South China University of Technology

Language: English

Topic: Supply Chain and Inventory Management

Subfield: Management Information Systems

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $2,896

Funder: National Natural Science Foundation of China