Research On The Supplier's Financing Mode Selection With Price-sensitive Demand

Small and medium-sized enterprises(SMEs)play an important role in providing employment and promoting future economic growth.In China,small and medium-sized enterprises contributed almost 60% of the country's exports.More and more small and medium enterprises began to seek development opportunities in the global market environment.However,with the intensification of globalization,market competition has gradually risen from the enterprise level to the supply chain level,coupled with the weak anti-risk ability and the lack of necessary collateral,the competitive situation that SMEs face is increasingly severe.The financing dilemma not only affects small and medium-sized enterprises,but also the entire supply chain.Combined with the actual situation of SMEs lacking credit guarantees in China,the delay payment financing and the confirmed warehouse financing get a wide range of applications and development.Thus this paper discusses trade credit and confirmed warehouse financing both with a markdown allowance from a supplier's perspective.We considers a two-level supply chain consisting of a supplier and a retailer.It models the supplier and retailer's strategic interaction as a Stackelberg game with the supplier as the leader.We set up the wholesale price contract considering the end-consumer demand with price sensitivity,and obtain the supplier's optimal wholesale price and the retailer's optimal order quantity both in the decentralized and in the centralized supply chain.Furthermore,the paper shows that using either trade credit with markdown allowance or confirmed warehouse financing with markdown allowance enables the supplier to fully coordinate the retailer's decision for the largest joint profit.Besides,when trade credit and confirmed warehouse financing both achieve the coordination under the wholesale price contract with markdown allowance,we make a comparative study of the two when demand is evenly distributed.Given the change in demand elasticity and price fluctuation,we find that the retailer and the integrated supply chain are better off with trade credit regardless of the value of p.For the supplier,it depends on the situation.When the demand elasticity is low,the supplier prefers the confirmed warehouse financing to trade credit,and vice versa.