Study on the Selection Strategy of Supply Chain Financing Modes Based on the Retailer’s Trade Grade
Abstract
:1. Introduction
2. Literature Review
3. Modeling Framework of Supply Chain Financing
3.1. Problem Description
3.2. Notation and Assumption
- (1)
- Information is symmetrical among the supplier, retailer as well as the bank. All of them are risk-neutral and pursue the maximization of profits.
- (2)
- The bank and the supplier are assumed to face no bankruptcy risk; the retailer may face bankruptcy risk, depending on whether his liquid assets and collateral assets can cover his loan obligations.
- (3)
- The retailer is credit-worthy and will repay their loan obligations (if any) to the extent possible.
- (4)
- Goodwill cost is ignored in our model.
- (5)
- To ensure that the model has an optimal solution, we assume that the demand distribution function is continuous, steerable, and strictly increasing. We restrict our attention to demand distributions with an increasing failure rate (IFR).
- (6)
- Note that if , the retailer does not order, and if < c, the supplier is not willing to sale. To avoid trivial cases, we assume .
4. Optimal Strategies of Supply Chain Financing under Different Financing Modes
4.1. Internal Financing
4.2. External Financing
5. Numerical Examples
6. Conclusions
Author Contributions
Funding
Conflicts of Interest
References
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: Retailer’s collateral assets pledged to secure the loan. |
: Retailer’s initial capital when purchasing |
: Retailer’s unit retail price of the product |
: Supplier’s unit wholesale price of the product |
: Supplier’s unit production cost. |
: Supplier’s unit buy-back price of the product |
: Supplier’s interest rate for the period from order up to the end-of-season sale |
: Bank’s interest rate for the period from order up to the end-of-season sale |
: Retailer’s bankruptcy boundaries |
: Retailer’s expected earnings |
: Supplier’s expected earnings |
: Bank’s expected earnings |
: Retailer’s order quantity |
: The probability density function (PDF) of the demand distribution |
: The cumulative distribution function |
Collateral Asset | Internal Financing | External Financing | |||||
---|---|---|---|---|---|---|---|
100,000 | 612 | 251,352 | 254,504 | 653 | 284,195 | 262,904 | 363,494 |
120,000 | 633 | 271,625 | 263,099 | 676 | 307,312 | 275,888 | 384,396 |
140,000 | 657 | 291,576 | 272,594 | 703 | 330,295 | 281,804 | 403,836 |
160,000 | 682 | 309,586 | 283,557 | 734 | 352,822 | 290,978 | 426,214 |
180,000 | 704 | 327,980 | 291,240 | 765 | 374,387 | 301,112 | 448,565 |
200,000 | 739 | 341,627 | 306,465 | 799 | 394,999 | 314,300 | 468,486 |
220,000 | 762 | 358,286 | 314,303 | 832 | 414,488 | 327,192 | 489,724 |
240,000 | 784 | 372,104 | 323,796 | 858 | 433,318 | 337,282 | 508,111 |
260,000 | 816 | 382,326 | 337,607 | 890 | 450,950 | 342,050 | 521,250 |
280,000 | 844 | 392,778 | 349,686 | 922 | 467,558 | 357,842 | 534,893 |
300,000 | 872 | 400,248 | 351,786 | 953 | 483,295 | 363,804 | 545,758 |
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Yu, J.; Zhu, D. Study on the Selection Strategy of Supply Chain Financing Modes Based on the Retailer’s Trade Grade. Sustainability 2018, 10, 3045. https://doi.org/10.3390/su10093045
Yu J, Zhu D. Study on the Selection Strategy of Supply Chain Financing Modes Based on the Retailer’s Trade Grade. Sustainability. 2018; 10(9):3045. https://doi.org/10.3390/su10093045
Chicago/Turabian StyleYu, Jianjun, and Dan Zhu. 2018. "Study on the Selection Strategy of Supply Chain Financing Modes Based on the Retailer’s Trade Grade" Sustainability 10, no. 9: 3045. https://doi.org/10.3390/su10093045