| Capital constraints affect the profitability and competitiveness of the whole supply chain system and members. As an effective means to ease the capital pressure for supply chain members, internal financing inside the supply chain system has been widely used in practice. Internal financing inside the supply chain system refers to a financing mode in which the capital-adequate members of a supply chain infuse capital into the capital-constrained members through advance payments or delay in payments. Internal financing model do not need additional assets as collateral. Furthermore, the lenders have better information about the borrowers. This paper research that capital-constrained supplier design a preorder price discount to attract retailers pay in advance, thus easing the pressure of financial problems.(1) It introduces the trade credit theory, analyzes the mode of supply chain internal and external financing, and summarizes the odds of supply chain internal financing. Then it analyzes existing literature for the study of supply chain financing problems, and find the point of this study on this basis.(2) It analyzes prepayment financing mode for single supplier. It studies the retailer’s optimal prepayment decision and the supplier’s optimal production decision under different price discount. Furthermore, it analyzes the optimal amount of advance payments and the optimal production under different funds of the supplier. And then the paper analyzes how different funding levels affect the overall performance of the supply chain.(3) Considering the multi-vendor, it studies the optimal prepayment decision and production decision under different price discount and funds. Then it compares the optimal decision to single supplier’s, and analyzes the effect of competition to internal supply chain financing.Finally, it verifies the rationality and feasibility of the conclusions through the example application analysis, providing practical reference for the financing of SMEs. |
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