Study On Supply Chain Coordination Under Capital Constraint

In China, most small and medium-sized enterprises were faced with funding constraintwhich is the urgent bottleneck for them. Because the credit of small and medium-sizedenterprises (SMES) is too low to get funding from the bank, as for the entire supply chainwhich is comprised of most small and medium-sized enterprises (SMES), so, the lack of fundsof SMES will make the whole supply chain imbalances and lead to inefficiency of the overallsupply chain.On the one hand, with the development of supply chain finance business which makesthe SMES can get financing loans from bank with the help of core enterprise; On the otherhand, the core enterprise can provide SMES who are the member, of supply chain withdelayed payment to reduce capital constraint conditions. However, a new problem arises, howto coordinate the supply chain after obtain financing so that the loan can be used withmaximized utility.This paper studies the supply chain coordination issue with capital constraint understochastic demand. As for the supply chain composed of one manufacturer (core enterprise)with sufficient working capital and one under cash-constrained retailer, the retailer cannotafford optimal order due to lack of budget.This paper considers supply chain Coordination under two kinds of financing mode, thefirst one is external finance, in order to expand market share, the manufacturers will offer hiscredit as a guarantee to help the retailer to borrow loan from bank. The second one is internalfinancing, that is, well-funded manufacturers providing commercial credit, allowing theretailers to delay the payment which can alleviate retailer’s condition of insufficient funds.Under the Stackelberg game, the manufacturers as the leading enterprises, retailers as thefollower, this paper sets the optimal expected profit of supply chain member enterprises as theobjective function to establish coordination mathematical model.Firstly, under the external financing, this paper proposes the bilateral incentive contactthat the manufacturer shares financing cost with the retailer as an incentive, meanwhile, theretailer offers transfer payment to manufacturer. By setting contract parameter, underinformation symmetry, the optimal order quantity can achieved, the profits can be allocated arbitrarily and supply chain can be coordinated perfectly; under internal capital informationasymmetry, the contract can encourage retailer to reveal real information and control thereverse selection effectively, optimal order and the pareto optimal condition of supply chaincan be achieved.Secondly, under the internal financing, the manufacturer allows capital constraintsretailer to delay payments, meanwhile, the revenue sharing contract is introduced by whichthe perfect coordination of supply chain can be achieved and analyzes the effective range ofrevenue sharing coefficient, so that the contract can allocate profit makes the flexible toeffectively and make sure that this contract can be accepted by supply chain members.And then, this paper compares these two kinds of financing patterns and finds that delaypayment can achieve the perfect coordination of supply chain with revenue sharing contract;as for the external financing, due to the cost of financing, unable to make the supply chainachieve the optimal profit. And delayed payment pattern under revenue sharing contract caneffectively avoid the asymmetric information situation, avoid retailers "adverse selection",which is beneficial to strengthen cooperative relations between supply chain members.At last, numerical examples are conducted to validate conclusion, and impact of the modelparameters change on the supply chain profits are also analyzed.