Retailer’s Ordering Policy Based On Supply Chain Financing Circumstance

In the process of China’s national economic development, small and medium-sized enterprises occupy the important position and the financial requirement of them increases. For most of these enterprises, the main financing way is to loan from the bank. However, due to the lack of mortgage-backed assets and the low level of credit ratings, these enterprises are difficult to get loans from the bank, which is a major obstacle to their development. Fortunately, supply chain financing emerges and develops rapidly under the background of supply chain management. In order to support the small and medium-sized enterprises in the upstream and downstream, supply chain financing integrates them with the core enterprises, by which the financing security is taken. In this way, small and medium-sized enterprises can obtain financing depending on the good reputation of the core enterprises. Supply chain financing improves the financing efficiency and scale, alleviating the financing difficulties of small and medium-sized enterprises. By providing an effective way to solve the problem of financing difficulties of small and medium-sized enterprises, it enhances the overall competition ability of the supply chain.In the supply chain, operation and financing decisions always influence each other. This paper discusses cash-strapped retailers’ ordering strategy after the supply chain financing in a two-level supply chain consists of suppliers and retailers. Cash-strapped retailers can choose two kinds of supply chain financing ways:the external financing and the internal financing. In the external financing situation, enterprises apply for a loan from the bank under the credit guarantee of core suppliers. In the internal financing situation, the financing is provided by core suppliers based on commercial credit. This paper first introduces retailers’ ordering model in three different financing situations including no financing, internal supply chain financing and external supply chain financing. Based on the models above, we model the supply chain contract coordination mechanism with revenue sharing and repurchase contract. By solving the model, we compare the retailer’s ordering decision under the internal supply chain financing and external supply chain financing. We discuss the retailer’s ordering strategy and the collaborative optimization of operation and financing in the supply chain by using a numerical example.The study shows that:the retailer’s order quantity and the expected revenue obviously increase after the supply chain financing which indicates that he supply chain financing services create considerable value for retailers. Accordingly, the sales of core suppliers also increases, indirectly expanding their own production and operation. The numerical example shows that the buyback contract and the revenue sharing contract are all effective, the contract increases retailer’s order quantity and the expected revenue. While established inappositely, the contract may lead to a drop in retailers order quantity and effect would not be advisable.