Research On Coordination Decision Of Financing Arrangements And Operation Investment To The Capital-constrained Supply Chain

With global market competition intensifying, capital constraints become widespread phenomenon enterprises in supply chain. When funds of companies can not meet their needs of operating investment, they can choose loan from commercial bank, or choose to use credit financing between enterprises in supply chain, or choose to use combination finance of above these two forms and so on. In order to study how different finance choices of financial constraints enterprises influence on coordination strategy of operation investment in supply chain, this paper separately researches coordination decision on external finance, internal finance and combination finance with operation investment by building mathematical models to consider effect of financing bankruptcy in a two-level supply chain composed of a retailer and a supplier. In additional, this paper discusses optimal coordination decision-making problems between external finance, internal finance and investing based on asymmetric information. And further it is discussed that a core enterprise playing different roles in funding constraints supply chain has impact on finance and investment decisions and system value. The main research work is as follows:(1)Coordination decision-making on external finance and operation investment in supply chain. This paper separately research coordination decision-making on finance and investment in two-level supply chain under the statu of a retailer’s working capital, which includes having sufficient capital, having capital constraints and no financing, having capital constraints and financing. In additional, it is focused on the impact of external finance on operational strategy of member enterprises and supply chain entirety under equilibrium wholesale price and given wholesale price. The results show that the retailer has a limited finance capacity and a limited order levels under uncertain demand distribution. A capital-constrained retailer may achieve the optimal order and create value for the supply chain through external financial services. In Addition, bankruptcy cost variable is brought into investment and finance decisions model in supply chain. Thus it is researched that bankruptcy cost rate and initial capital amount of a retailer and risk-free rate have effect on equilibrium order, wholesale prices and profits in supply chain.(2)Coordination decision-making on internal finance and operation investment in supply chain. Firstly, this paper comparatively researches centralized decision-making under different finance choice between bank loan and commercial credit in integrated supply chain. Secondly, this paper builds coordinated decision-making model about internal finance and operation investment in supply chain by considering incentive contract mechanisms of the buyback, delayed payments and wholesale price and the factor of bankruptcy risk. The results show that a supplier being a leader at a Stackelberg game may comprehensively utilize a variety of contractual mechanisms to achieve coordination of investment and finance in supply chain and maximize joint profits of the supply chain and optimal profit of its own.(3)Coordination decision-making on combination finance and operation investment in supply chain. Based on hypothesis of capital constraint and bankruptcy risk, this paper researches the coordination decision-making on combination finance and operational investment in supply chain. The result shows suppliers and retailers have maximum finance limitation under the optimal order quantity or production quantity investment constraints. The results show that the optimal decision of the supplier is equivalent to the optimization problem under the traditional newsvendor model when it has a sufficient internal capital. The supplier will adopt sole consignment mode. The suppliers will choose a combination program of internal and external finance to achieve optimal decision and will choose a combination mode of pre-order and consignment.( 4) Optimization decision finance and investment on supply chain under asymmetric information. Based on differences in information status about investment project within supply chain among participating members, this paper researches information advantage between internal financing sides in the supply chain. Also this paper researches optimal coordination decision-making problems between finance and investment distinguishing different status, which includes considering information cost, not considering information cost and considering income from supply chain finance. The results show that increase in value within supply chain finance refers to interest rate arbitrage between financing bodies and external finance income if information cost is neglected; marginal cost that fund-raising party transfers information to investor is equal to reduction of the latter’s marginal return, which is the optimal decision point if information cost is considered, thus maximize value of the supply chain will be reached. If financing within supply chain will get sufficient external income, it is still feasible,even if no interest rate arbitrage.(5)System value of a core enterprise in capital-constrained supply chain. Under the assumption of a capital-constrained retailer exsiting bankruptcy risk, this paper comparatively analyze how traditional role, security role and coordinate role which a supplier may play in supply chain affect decisions and value of supply chain and its members. The results show that a retailer’s capital constraint and bankruptcy risk can lead to lower efficiency and profits of supply chain. Security role and coordinate role may create new value for supply chain and its members because of their mechanism for sharing the risk of the market with a retailer. A supplier’s coordinating role can also use a lower risk premium between finance sides resulting from information advantage to create more value for supply chain system. This paper also researches initial capital amount and bankruptcy risk of a retailer have effect on coordination decision-making of finance and investment in supply chain. And it finds the relation between balanced wholesale price, optimal order quantity and initial capital, bankruptcy of ratailer.