Optimal Pricing, Ordering And Financing Policies In A Budget-Constrained Supply Chain

It was proven by many practices that financial decisions make great impact on theenterprise’s operational decisions. In the current situation, along with the deterioratedmarket environment and the increasing competition, more and more small andmedium-sized enterprises are facing severe capital-constrained problem, turning into thenew Bottleneck of the supply chain. Then searching for bank loan is an importantapproach to improve there capital flow and performance. In such a case, we set up aStackelberg game to examine the impact of financial service on the performance of atwo-level supply chain which consists of a single supplier and a single budget-constrainedretailer. When the selling season begins, the supplier determines the wholesale price first.And then the budget-constrained retailer decides whether to accept it or not. If thewholesale price is accepted, the retailer determines her financial and ordering decisionsbased on her initial capital, loan interest rate and the demand forecasting. Because of theshort life cycle of the single period product, the retailer can order only once and can’treorder after the selling season begins. What’s more, facing a random price-dependentdemand function, the retailer’s pricing decision will affect her ordering and financialdecisions. By setting up this model, this thesis studies the optimal pricing, ordering andfinancial decisions of the budget-constrained retailer. We also study the optimal financialservice decisions of the bank and the optimal pricing decisions of the supplier. We findthat financial service can improve the performance of the budget-constrained supply chainand create value for both the supplier and the retailer. This thesis has some instructive tothe practice of enterprises.