no. 4
Risk control mechanisms of third-party guarantee when financing newsvendor
RAIRO. Operations Research, Tome 55 (2021) no. 4, pp. 2337-2358

Two risk control mechanisms, namely, cash deposit, and loan limits based on retained profit or maximum expected guarantor profit, are developed for capital-constrained newsvendor financing. Results show that with a large initial capital or mortgage asset, the newsvendor reduces the order quantity to avoid bankruptcy risk. Under the risk control mechanism with a cash deposit, the guarantor gains greater profit when the newsvendor has a low initial capital. Setting a loan limit is thus an effective mechanism for newsvendors to not only reduce the bankruptcy risk, but also increase the guarantee profit. Numerical experiments also show that, compared with the risk control mechanism based on maximum expected profit, loan limits based on retained profit is more beneficial for the newsvendor, guarantee, and the bank.

Reçu le :
Accepté le :
Première publication :
Publié le :
DOI : 10.1051/ro/2021105
Classification : 90B06
Keywords: Supply chain finance, risk control, newsvendor financing, guarantee 
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     title = {Risk control mechanisms of third-party guarantee when financing newsvendor},
     journal = {RAIRO. Operations Research},
     pages = {2337--2358},
     year = {2021},
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Huang, Jiazhou; Lu, Qihui; Chen, Xiangfeng; Zhan, Jizhou. Risk control mechanisms of third-party guarantee when financing newsvendor. RAIRO. Operations Research, Tome 55 (2021) no. 4, pp. 2337-2358. doi: 10.1051/ro/2021105

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