Research On The Propagation Of Financial Distress And Control Model Based On Different Contracts

Financial distress describes the state of a company under low cash flow,which will worsen the financial situation of the enterprises.Then the company troubled with financial distress will ultimately fall to bankruptcy.With the fierce market competition,diversification of customer needs and variability,individual companies cannot rely on their own ability to entirely meet customer needs for competitive advantage.With increasing opportunities for cooperation,contact between enterprises has become more closely,more companies have chosen together to form the supply chain.Flow of funds between enterprises also become more closely.If an enterprise falls in financial distress on the chain,the distress will transfer with order quantity as the carrier to other companies of the chain,which can cause the entire chain falls in financial troubleBased on this background,this paper,on the perspective of supply chain,describes the process of financial distress from the retailer to the manufacturer,taken delivered at random demand and the level of effort by the business impact of the conditions into account,and then propose establishing revenue sharing contract,quantity discounts contract and centralized decision-making coordination mechanism to control financial distress.Then this paper discussed at different levels of the plight of retailers manufacturers decision-making behavior.Finally,the decision model under three different coordination mechanisms to verify numerical analysis,the optimal order quantity obtained under varying degrees of difficulties,efforts factors and wholesale prices,and analyzed the decision-making behavior under a variety of circumstances values,verify the model usefulness.The results show that:when the retailer fall into financial difficulties,the decision model based on cooperation mechanism play a good control effect of controlling financial distress.Centralized decision-making mechanism which compared to other strategies can achieve better results and maximize the profits of retailers and manufacturers.However,centralized decision-making mechanism to coordinate is the most idealized market economy,as it is difficult to establish a relatively ideal environment.In the supply chain contract environment,using quantity discount contract better than the revenue-sharing contract to establish the effect.This is because the market demand changed whit sales efforts,using quantity discount contract can more effectively implement incentive.