Strategies of Financing for Supply Chains Based on Suppliers’ Buy-back Guarantee

Abstract

Abstract:

Suppliers’ buy-back guarantee can prompt the risk-averse bank to boost the loan limit to capital-constrained retailers, which can enhance the purchasing power of retailers and increase the performance of supply chain. The optimal operational and financing strategies of retailers were studied, and the impact of the risk averse degree of the bank and the buy-back price of the supplier on the decisions of the supply chain were analyzed under the downside risk control of the bank and the buy-back guarantee of the supplier. It is shown that the downside risk control of the bank is equal to the loan limit control and the loan limit is increasing in the buy-back price of the supplier. It is also shown that there exists a threshold about the buy-back price such that the ordering decision of the retailer is influenced by the risk control of the bank only when the buy-back price of the supplier is lower than the threshold. Finally, the numerical study was given to analyze the optimal pricing problem of the supplier.

Key words: supply chain management, capital constraints, buy-back guarantee, risk aversion, financing

CLC Number:

F 272.3

WANG Wenli1,2,LUO Jianwen1,ZHANG Qinhong1. Strategies of Financing for Supply Chains Based on Suppliers’ Buy-back Guarantee[J]. Journal of Shanghai Jiaotong University, 2013, 47(10): 1638-1642.

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