A Research Of Inventory Financing In A Capital-constraint Supply Chain

Chinese small and medium-sized nodal enterprises of the supply chain have difficultiesin borrowing and financing because of small scale, poor ability to resist risks and little senseof credit. Therefore, they are shortage of capital. Their operation decisions are affecting byfinancial condition deeply. Enterprise’s financial condition and earnings are affecting byinternal financing of supply chain, capital constraint and inventory financing from theresearch of enterprises and scholars. However, there’re less studies including those factorsinfluenced the ordering policy.Under this background, this paper studies the problem of capital constraints of supplychain financing. We study the difficult of constraints of supply chain financing first. And thenstudy their present financial channels, analyze the reason of financing difficulties of small andmedium-sized enterprises of supply chain, compare the business model of inventory financingat home and abroad. We set up the inventory financing mode occurrence of actual cash flowand the inventory financing mode without occurrence of actual cash flow.This paper is based on a supply chain with uncertain demand consist of one single capitalconstraint retailer and one single manufacturer who has lots of inventory to release in order toobtain current capital. We discuss three financing modes: no financing service, financing fromthe intern of supply chain and financing by inventory pledge to the commercial bank. Fromthe view of the whole supply chain, we compare the overall cost-benefit models of the threemodes, on purpose of deciding the appropriate financing mode we should choose underdifferent circumstances.Numerical analysis about cost-benefit models of the three modes are provided tovalidates the conclusion of the model. We put forwards some countermeasure and suggestionsbased the model.