Research On Distributor's Ordering Decisions On Inventory Financing Based On Supplier's Buy-back Contract

Integrating the traditional inventory financing mode with the important thoughts of supply chain financing,the new inventory financing mode based on supplier's buy-back contract came into being.By introducing the supplier's buy-back mechanism,the small and medium-sized enterprises on the supply chain will be more likely to get loans from the bank.Besides,the supplier,serving as the leading enterprise,will have more power to adjust production and sales on the supply chain,thus realizing the supply chain coordination.For the bank,the supplier's buy-back guarantee will significantly reduce the credit risk.As a result,the bank will have more chances to widen its business scope and get more potential customers with good credit.In a word,the new inventory financing mode will surely exert positive effect on all parties including the bank,financing companies,as well as the supplier.This paper aimed to analyze the operating mechanism and decision process of the inventory financing mode based on supplier's buy-back contract.On this basis,it established a secondary supply chain composed of the a leading supplier and a distributor,and studied distributors' optimal ordering decision and supply chain coordination problems by combining with the thoughts and methods of game theory.Firstly,it studied the degree of supply chain coordination under the inventory financing mode without supplier's buy-back mechanism.By establishing the profit model of supplier,distributor and the supply chain,it analyzed the difference of the optimal ordering volume and the overall revenue of supply chain under centralized decision and decentralized ones,thus,providing necessary reference resources for the suppler and distributor's decision makings under the buy-back mechanism.Secondly,it introduced the supplier's buy-back mechanism.By establishing the distributor's ordering volume decision-making model,it analyzed the relationships between the optimal ordering volume and its influencing factors.What's more,it figured out the appropriate buy-back price level that can coordinate the supply chain,and compared the supplier's profit under the pure wholesale price contract and the buy-back ones,thus figuring out the wholesale price level that the supplier can accept when offering full repurchase.Finally,it proposed a modified buy-back contract with target ordering quantity.By comparing the distributor's expected profit under different target ordering quantity,the distributor can decide to accept this buy-back contract or not,thus figuring out the feasible target ordering quantity level and the corresponding buy-back price level when the supply chain is coordinated.On this basis,it compared the two kinds of buy-back contracts' advantages and disadvantages,and provided theoretical guidance for the supplier and distributor's decision makings.