Production And Portfolio Financing Strategies For A Capital-Constrained Remanufacturing Supply Chain

With the rapid development of economy and technology,the replacement of products is greatly accelerated,resulting in the backlog of end-of-life products.In China,the sales volume of construction machinery reaches its peak in 2008,and a large number of the sold equipment is currently in the period of upgrading.China also has the world’s largest inventory of machine tools,and its machine tool industry is currently facing an urgent need of transformation and upgrading to the direction of digitization and intelligence.The Home Appliances to the Countryside scheme begun in 2008 would bring a wave of replacement of home appliances in recent years.Moreover,the development of new energy and smart cars would also promote the renewal of automobiles.Therefore,there is a great remanufacturing potential in China.Meanwhile,the China’s goals of peaking carbon dioxide emissions and neutralizing carbon would let the low-carbon and environmental-friendly advantages of remanufacturing become more outstanding.However,the foundation of the current remanufacturing industry is still weak,small-and medium-sized enterprises still play an important role in the composition of the remanufacturing supply chain,and the shortage of growth funds is still prominent.Hence,it is necessary to study remanufacturing activities with integrating financing factors.Due to the diversity and risk of financing channels,enterprises would not always rely on a single financing channel to raise funds,thus a portfolio of financing channels would be a more realistic option for capital-constrained enterprises.Therefore,it would be of great academic value and practical significance to study the joint optimization of the production planning and portfolio financing strategies in a remanufacturing supply chain.With the utilization of closed-loop supply chain management theory,supply chain finance theory,game theory and newsboy model,this paper will focus on two dominant remanufacturing modes: OEM(Original equipment manufacturer)remanufacturing and TPR(Third-party remanufacturer)remanufacturing,and consider two financial conditions: OEM’s unilateral capital constraint and the bilateral capital constraint of the whole remanufacturing supply chain.Then,by dividing four scenarios according to remanufacturing mode and financial condition,we research on the optimal production and portfolio financing strategies of a remanufacturing supply chain,and analyze how remanufacturing activities would affect the equilibrium internal structure of OEM’s financing portfolio or the financing collaboration among the chain members.The specific research contents of this paper are as follows:Firstly,construct a unilaterally capital-constrained remanufacturing supply chain composed of a dominant supplier and a capital-constrained OEM,and consider the following three financing strategies: pure bank loan,financing portfolio: full delay-in-payment with bank loan,financing portfolio: partial delay-in-payment with bank loan.Based on the assumptions of demand uncertainty and limited repayment liability,the game model under the three financing strategies is formulated and solved respectively.Through comparative analysis,we respectively explore the influence of different financing strategies on OEM-remanufacturing production,the financing choice of OEM-remanufacturing supply chain under unilateral capital constraint,and the impact of OEM-remanufacturing on the optimal structure of OEM’s portfolio financing.Then,construct a unilaterally capital-constrained remanufacturing supply chain composed of a TPR and a capital-constrained OEM,and consider the following financing strategies:pure bank loan,financing portfolio: full delay-in-payment with bank loan,financing portfolio:partial delay-in-payment with bank loan.The game model between TPR and OEM under the three financing strategies is built and solved respectively.Through comparative analysis,we respectively analyze the influence of portfolio financing to TPR-remanufacturing production,the financing choice of TPR-remanufacturing supply chain under unilateral capital constraint,and the impacts of TPR-remanufacturing on the optimal structure of OEM’s portfolio financing.Furthermore,construct a bilaterally capital-constrained remanufacturing supply chain composed of a capital-constrained supplier and a capital-constrained OEM,and consider the following financing strategies: pure bank loan,financing portfolio: bank loan with delay-in-payment,financing portfolio: bank loan with advance payment.Through numerical analysis,we explore the value of portfolio financing to OEM’s hybrid manufacturing/remanufacturing production,and the impacts of OEM-remanufacturing on the financing collaboration between supplier and OEM.Lastly,develop a bilaterally capital-constrained remanufacturing supply chain in which a capital-constrained OEM outsources or authorizes its remanufacturing a capital-constrained TPR,and consider the following financing strategies: separate bank financing,financing portfolio: bank financing with delay-in-payment,financing portfolio: bank loan with advance payment.The Stackelberg game model under the three financing strategies is built and solved respectively.Through comparative analysis,we respectively discuss the value of portfolio financing to TPR-remanufacturing production,and the impacts of TPR-remanufacturing on the financing collaboration between OEM and TPR.The innovations of this research are mainly reflected in the following aspects:(1)In the field of remanufacturing operations research,there are few literature on remanufacturig integrating financial factors.Then,based on pure bank financing situation,this paper focuses on the remanufacturing production decision in the case of portfolio financing,and analyzes the value of portfolio financing to remanufacturing production and the supply chain performance.(2)In the research filed of supply chain finance,most of the exiting research focuses on forward supply chain,but rarely involves reverse or remanufacturing supply chain.In this paper,we extend the research background of supply chain finance to remanufacturing supply chain.Then,we study the financing choice under different remanufacturing modes,and the influence of remanufacturing on the optimal structure of the financing portfolio,so as to realize the enrichment and expansion of supply chain finance theory.(3)Existing studies on remanufacturing with integrating financial factors all consider the case where only one member is faced with limited self-owned funds while the rest members are sufficiently funded.Differently,considering the fact that the global remanufacturing industry is still very weak,this paper further investigates the remanufacturing production and financing strategies under bilateral capital constraint based on the previous research on unilateral capital constraint.