Commodity options purchasing and credit financing under capital constraint

Feng, Yi; Mu, Yinping; Hu, Benyong; Kumar, Arun

doi:10.1016/j.ijpe.2014.03.003

Cited by 43 publications

(28 citation statements)

References 29 publications

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“…(2) and (3), the optimal solutions of model M0 are intuitional. Based on (8) in Theorem 3, the following properties concerning optimal stocking factor * in model M1 can be concluded.…”

Section: Model Comparative Analysesmentioning

confidence: 98%

“…Many researches focus on the impacts of financial constraint on retailer's ordering/inventory policy. Research results show that retailer's optimal ordering policy will not be influenced by financial constraint in the presence of a competitively priced lending market [6,11,12,17], but it will be affected by retailer's internal capital level as well as loan interest rate when the retailer is faced with a noncompetitively priced lending market [7,8].…”

Section: Interface Of Operations and Financing Decisionsmentioning

confidence: 99%

“…Towards "capital-constrained newsvendor" problem, many scholars study the retailer's integrated decision on operations and financing in the presence of capital constraint, including studies on optimal order quantity [7], purchase timing [8,9], and financing mode selection [10][11][12]. These researches are all based on classical newsvendor models where market prices and demand distributions are exogenously given.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Optimal Ordering and Pricing Policies for Seasonal Products: Impacts of Demand Uncertainty and Capital Constraint

Shi

Fung

Guo

2016

Discrete Dynamics in Nature and Society

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With a stochastic price-dependent market demand, this paper investigates how demand uncertainty and capital constraint affect retailer's integrated ordering and pricing policies towards seasonal products. The retailer with capital constraint is normalized to be with zero capital endowment while it can be financed by an external bank. The problems are studied under a low and high demand uncertainty scenario, respectively. Results show that when demand uncertainty level is relatively low, the retailer faced with demand uncertainty always sets a lower price than the riskless one, while its order quantity may be smaller or larger than the riskless retailer's which depends on the level of market size. When adding a capital constraint, the retailer will strictly prefer a higher price but smaller quantity policy. However, in a high demand uncertainty scenario, the impacts are more intricate. The retailer faced with demand uncertainty will always order a larger quantity than the riskless one if demand uncertainty level is high enough (above a critical value), while the capital-constrained retailer is likely to set a lower price than the well-funded one when demand uncertainty level falls within a specific interval. Therefore, it can be further concluded that the impact of capital constraint on the retailer's pricing decision can be influenced by different demand uncertainty levels. Hindawi Publishing CorporationDiscrete Dynamics in Nature and Society decisions on ordering, pricing, and financing, which is not observed in existing literature. The main contributions and conclusions of this paper are as follows.(1) Studying Retailer's Integrated Decisions on Ordering, Pricing, and Financing. With introducing pricing decision into the "capital-constrained newsvendor" problem, this paper investigates the retailer's integrated ordering and pricing decisions in the presence of capital constraint. Results show that when market size is extremely small, the retailer will not borrow from the bank to order any quantity. Otherwise, it will borrow to order and its optimal order quantity and selling price can be uniquely determined.(2) Investigating the Impacts of Demand Uncertainty and Capital Constraint on Retailer's Optimal Ordering and Pricing Policies. Three models (i.e., the riskless model, uncertainty model, and uncertainty-underfunded model) are developed and in-depth comparisons of optimal solutions in three models are carried out to reveal how demand uncertainty and capital constraint affect retailer's integrated ordering and pricing policies. The problems are studied in a low and high demand uncertainty scenario, respectively, which is differentiated by an ingenious method, and plenty of conclusions are obtained through both theoretical analyses and numerical studies.The remainder of the paper is organized as follows. Section 2 presents the review of related literature. Section 3 describes the problem and provides the model notations and assumptions. Section 4 formulates three models and derives the optimal solutions. Sectio...

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“…(2) and (3), the optimal solutions of model M0 are intuitional. Based on (8) in Theorem 3, the following properties concerning optimal stocking factor * in model M1 can be concluded.…”

Section: Model Comparative Analysesmentioning

confidence: 98%

Section: Interface Of Operations and Financing Decisionsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Optimal Ordering and Pricing Policies for Seasonal Products: Impacts of Demand Uncertainty and Capital Constraint

Shi

Fung

Guo

2016

Discrete Dynamics in Nature and Society

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show abstract

“…In the completed competitive banking market, research has shown that capital constraints do not influence retailer's optimal decision [8,9]. On the contrary, capital constraints affect a retailer's strategy by using its internal capital and interest rate when it secures a loan from a noncompetitive banking market [10] or faces uncertainty demand in a price-dependent market [11,12]. To avoid risks, banks always require a credit guarantee from the upstream manufacturer when they offer the SME retailer a loan.…”

Section: Interface Of Operations and Financing Decisionsmentioning

confidence: 99%

Low Carbon Distribution Channel Coordination with a Capital-Constrained Retailer

Wang

Cheng

Zhang

2018

Discrete Dynamics in Nature and Society

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Capital constraints exist in many supply chains. We examine a low carbon distribution channel that consists of a manufacturer and a retailer, in which the retailer is constrained by capital. The retailer can be financed by bank credit from a competitive bank market. A Stackelberg model is developed to analyze the integrated decision-making process of ordering, financing, and emission reduction. By comparing the decentralized and centralized channels, we obtain that the manufacturer's green technology investment should be linearly proportional to the retailer's order quantity in both channels. Thus, a large order quantity leads to increased efforts to reduce emissions. Results further show that the centralized channel in some cases has fewer emissions and can generate more profits for the whole supply chain compared with the decentralized channel. We therefore propose a revenue sharing contract with a function form to coordinate the distribution channel. When the government allocates appropriate quotas to the supply chain, high carbon price can benefit the environment and supply chain efficiency.

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“…A lot of literatures showed that financing models can have great effects on the operation management of the supply chain members. [56][57][58][59][60][61][62][63][64] As we know, supply chain financing [65], as a kind of inter-firm financing, is an important source of capitals for both leader and follower firms. In addition, joint financing between supply chains, as a kind of inter-supply-chain financing, is also an important source of capitals for both supply chains with complementary products.…”

mentioning

confidence: 99%

Optimal Financing Decisions of Two Cash-Constrained Supply Chains with Complementary Products

Chen

Xin

2016

Sustainability

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Abstract:In recent years; financing difficulties have been obsessed small and medium enterprises (SMEs); especially emerging SMEs. Inter-members' joint financing within a supply chain is one of solutions for SMEs. How about members' joint financing of inter-supply chains? In order to answer the question, we firstly employ the Stackelberg game to propose three kinds of financing decision models of two cash-constrained supply chains with complementary products. Secondly, we analyze qualitatively these models and find the joint financing decision of the two supply chains is the most optimal one. Lastly, we conduct some numerical simulations not only to illustrate above results but also to find that the larger are cross-price sensitivity coefficients; the higher is the motivation for participants to make joint financing decisions; and the more are profits for them to gain.

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Commodity options purchasing and credit financing under capital constraint

Cited by 43 publications

References 29 publications

Optimal Ordering and Pricing Policies for Seasonal Products: Impacts of Demand Uncertainty and Capital Constraint

Optimal Ordering and Pricing Policies for Seasonal Products: Impacts of Demand Uncertainty and Capital Constraint

Low Carbon Distribution Channel Coordination with a Capital-Constrained Retailer

Optimal Financing Decisions of Two Cash-Constrained Supply Chains with Complementary Products

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