We consider a two-echelon supply chain consisting of one dominant supplier and one capital-constrained retailer. The retailer needs to solve the shortage of working capital either from a bank or from its core supplier, which offers trade credit when it is also beneficial to itself. We assume the retailer is risk-averse behavior and the supplier has different risk preference behaviors that jointly model risk-averse, risk-neutral, and risk-taking. With a wholesale price contract, we incorporate each member’s risk preference behavior into its objective function. Then we derive the optimal decisions in a Stackelberg game under bank credit financing and trade credit financing, respectively. We find that there exists a supplier’s risk preference threshold that distinguishes financing scheme. When the supplier is a relatively higher risk preference, trade credit financing makes both the retailer and the supplier better off and is a unique financing equilibrium. Otherwise, the members prefer bank credit financing. Besides, the supplier with relatively higher risk preference behavior prefers the retailer with a low initial capital as a partner; the supplier with relatively lower risk preference behavior prefers the retailer with a higher initial capital level. The above theoretical results are verified by numerical analysis.
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DOI : 10.1051/ro/2020094
Keywords: Risk preference, initial capital, trade credit financing, Bank credit financing, financing equilibrium
@article{RO_2021__55_S1_S2691_0,
author = {Zhen, Zhiyuan and Wang, Jingru},
title = {Joint financing and ordering decisions in a capital-constrained supply chain with risk preference},
journal = {RAIRO. Operations Research},
pages = {S2691--S2707},
year = {2021},
publisher = {EDP-Sciences},
volume = {55},
doi = {10.1051/ro/2020094},
mrnumber = {4223188},
language = {en},
url = {https://www.numdam.org/articles/10.1051/ro/2020094/}
}
TY - JOUR AU - Zhen, Zhiyuan AU - Wang, Jingru TI - Joint financing and ordering decisions in a capital-constrained supply chain with risk preference JO - RAIRO. Operations Research PY - 2021 SP - S2691 EP - S2707 VL - 55 PB - EDP-Sciences UR - https://www.numdam.org/articles/10.1051/ro/2020094/ DO - 10.1051/ro/2020094 LA - en ID - RO_2021__55_S1_S2691_0 ER -
%0 Journal Article %A Zhen, Zhiyuan %A Wang, Jingru %T Joint financing and ordering decisions in a capital-constrained supply chain with risk preference %J RAIRO. Operations Research %D 2021 %P S2691-S2707 %V 55 %I EDP-Sciences %U https://www.numdam.org/articles/10.1051/ro/2020094/ %R 10.1051/ro/2020094 %G en %F RO_2021__55_S1_S2691_0
Zhen, Zhiyuan; Wang, Jingru. Joint financing and ordering decisions in a capital-constrained supply chain with risk preference. RAIRO. Operations Research, Tome 55 (2021), pp. S2691-S2707. doi: 10.1051/ro/2020094
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