The Optimal Ordering Policies With Supply Chain Financing In A Capital-constraint Supply Chain

With the recent rapid development of economy and society, enterprise competition model began to transform from the competition between enterprises to the competition between supply chain gradually. There are a large number of small and medium enterprises in supply chain, and they are often limited by capital constraints. Especially the small retailers in the downstream supply chain, which cannot achieve the optimal order quantity in accordance with market demand due to capital constraints, gain serious damage. Maybe the damage will lessen the overall supply chain performance. Financial constraints have a significant impact on the company’s operations. Through existing theory, we can find that there are three ways to select for the retailers under the condition of the initial capital constrained:Supply chain out of financing, internal financing and advance payment financing. These three ways of financing will affect corporate capital position and earnings of enterprises, thereby affecting the overall revenue of supply chain. However, there is not a comprehensive study on the optimal ordering policies and the impact of the supply chain in these three ways.Based on this background, this paper studies optimal ordering policies of the supply chain consisting of a single manufacturer and a single retailer under the condition of the initial capital constrained. From the single retailer in the supply chain facing capital constraints, this paper analyzes the supply chain financing channels, and focuses on advance payment financing for the small retailers. We build the supply chain profit models under three different financing channels. From the overall perspective of the supply chain, this paper studies the optimal ordering policies,and discusses the supply chain financing channel to maximize profit of whole supply chain. Finally, numerical analysis shows the result.Numerical example shows that under capital constraints the internal financing and advance payment financing can greatly improve the supply chain,s expected profit. Without considering the limit of the manufacturers, commercial credit, the internal financing is better than advance payment financing.However, the internal financing itself has some limitations, and it can only exist in a certain range. When trade credit is less than a certain value, advance payment financing is superior to the internal financing.