Volume 55, 2021Regular articles published in advance of the transition of the journal to Subscribe to Open (S2O). Free supplement sponsored by the Fonds National pour la Science Ouverte
|Page(s)||S2691 - S2707|
|Published online||24 February 2021|
Joint financing and ordering decisions in a capital-constrained supply chain with risk preference
School of Business Administration, Hunan University, Changsha, Hunan 410082, P.R. China
2 School of Information and Mathematics, Yangtze University, Jingzhou, Hubei 434023, P.R. China
* Corresponding author: firstname.lastname@example.org
Accepted: 2 September 2020
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.
Mathematics Subject Classification: 35J20 / 35J25 / 35J60
Key words: Risk preference / initial capital / trade credit financing / bank credit financing / financing equilibrium
© EDP Sciences, ROADEF, SMAI 2021
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