Research On Manufacturer's Cash Flow Hedging Decision Under Dual Channels

Cash flow is an important factor for companies in their daily decisions.However,due to changes in exchange rates,interest rates,commodity prices,and the internal transitivity of supply,manufacturers' cash flows are highly volatile.When it comes to online direct sales and offline distribution of manufactures,the volatility of cash flow is more complicated.Cash flow hedge can avoid the risk of cash flow fluctuations but also erode their flexibility of formulating production strategies.Therefore,it is of great practical significance to study the manufacturers' hedging decision under the dual-channel sales model.This article considers a manufacturer that utilizes internal financing.The source of financing is internal cash flow,and all financing is used to improve production efficiency.The research is conducted from the following two levels:1)Consider the existence of a manufacturer and a distributor in the supply chain.The manufacturer is located in a monopoly market,and all products on the market are produced by the manufacturer.On the one hand,manufacturers sell products to consumers through online direct sales;on the other hand,they sell products to retailers.Retailers sell products to consumers.There is a certain degree of substitution between online channels and offline channels.The two play the Stackelberg game,and the manufacturer is the leader.The manufacturer compares hedging and non-hedging based on factors such as the degree of cash flow fluctuations,the maximum potential demand in the market,the sensitivity coefficient of substitute products,and the wholesale price.decision making.2)Consider the existence of a supplier and a manufacturer in the supply chain.All the raw materials of the manufacturer are only provided by the supplier.The supplier produces the raw materials and wholesales the raw materials to the manufacturer.The manufacturer only uses the raw materials provided by the supplier to produce products and sells them through online and offline channels.The two play the Stackelberg game,and the manufacturer is the leader,deciding the selling price of the product.The supplier,as a follower,decides the wholesale price of raw materials.Manufacturers make hedging decisions based on the market's maximum potential demand,cash flow volatility,and raw material production costs.The conclusion of this article is as follows:In model one,the manufacturer's hedging decision is related to the degree of cash flow volatility,wholesale price,maximum market demand,and cross-sensitivity.When the volatility of cash flow increases,or when the wholesale price increases,manufacturers are more inclined to not hedge;when the maximum potential demand of the distribution market and direct marketing market increases,manufacturers are more inclined to hedge.In the second model,the manufacturer's hedging decision is not only related to the market's maximum potential demand and the fluctuation of its own cash flow,but also to the supplier's production cost.