Research On The Hybrid Financing And Ordering Decisions In A Supply Chain With Capital Constraints

Capital shortage is a commonly concerned problem for many small and medium sized enterprises(SMEs).It not only influences the operations of the firms,but also the development of their upstream and downstream firms,thereby decreases the operational efficiency of the overall supply chain.Enterprises with capital constraints can solve capital pressure through debt financing or equity financing.Debt financing mainly includes bank credit and trade credit.However,in practice,due to the low credit rating and a lack of pledge,many SMEs often find it difficult to obtain adequate financing support from the bank or internal supply chain.Therefore,enterprises with capital constraints often use the hybrid financing schemes combining equity financing with debt financing to alleviate the capital pressure.Based on the real business environment,game theory as well as a newsvendor model,this paper studies the financing decisions and ordering decisions of capital constrained enterprises.The main research contents are as follows.First,we study the capital constrained manufacturer’s financing decision in a supply chain,where the manufacturer adopts two different hybrid financing schemes: one is retailer’s prepayment and equity financing,and the other is bank credit and equity financing.Based on newsvendor model,we design game models and obtain the optimal decisions under these two hybrid financing schemes,respectively.By making a comparative analysis of two financing schemes,we obtain the participants’ financing preferences.The results suggest that both the manufacturer and retailer prefer the hybrid financing scheme including prepayment and equity financing.Second,we investigate the capital constrained retailer’s financing decisions and ordering decisions.Under uncertain market demand,the capital constrained retailer adopts two different hybrid financing schemes: one is delayed payment and equity financing,and the other is bank credit and equity financing.By comparing the optimal decisions and profits between two financing schemes,we derive the participants’ financing preferences and financing equilibrium.The results show that the retailer always prefers bank credit and equity financing,while the manufacturer’s financing preference depends on equity financing ratio and production cost.Third,we study the optimal decisions in a supply chain,where both the manufacturer and the retailer suffer for capital shortage.The participants adopt the hybrid financing schemes by combining equity financing and debt financing.The manufacturer acts as the leader and first determines the wholesale price.As the follower,the retailer then determines its order quantity.By comparing the participants’ profits between two financing schemes,we obtain the participants’ financing preferences and financing equilibrium.In addition,we investigate the impact of equity financing ratio on the equilibrium results.The results show that the retailer always prefers the financing scheme combining bank credit,equity financing with advance payment.However,the manufacturer prefers the financing scheme combining bank credit,equity financing with delayed payment if and only if both equity financing ratio and production cost are relatively low.