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Mathematical Problems in Engineering
Volume 2016 (2016), Article ID 6597259, 14 pages
http://dx.doi.org/10.1155/2016/6597259
Research Article

Optimal Decisions and Financing Strategies Selection of Supply Chain with Capital Constraint

1School of Business, Hohai University, Nanjing 211100, China
2School of Business, Beifang University of Nationalities, Yinchuan 750021, China
3Jiangsu Provincial Collaborative Innovation Center of World Water Valley and Water Ecological Civilization, Nanjing 211100, China
4College of Mathematics and Information Science, Beifang University of Nationalities, Yinchuan 750021, China

Received 7 January 2016; Accepted 15 June 2016

Academic Editor: Chaudry M. Khalique

Copyright © 2016 Bo Wang et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Two financing modes can be considered for manufacturer’s production capital constrained: RPFM (retailer’s prepayment financing mode) and PCFM (procurement contract financing mode). Under the RPFM, the retailer places order in advance for a discount price and makes prepayment; manufacturer is able to finance from a bank as production quantity cannot satisfy the second-order quantity of retailer. By contrast, manufacturers make financing from commercial banks based on the procurement contract with upstream supplier under the PCFM. Taking into account the relation between production volumes with the manufacturer’s own capital and retailer’s order quantity, the optimal production and financing decision model for manufacturer under these two financing modes are built. Moreover, the profits of the manufacturer, the retailer, and the supply chain are compared and discussed. Results show that both of the two modes can create new value and profit for the supply chain with capital constraint and achieve optimal production under “newsvendor” mode; the supply chain has the better performance under the RPFM than that achieved under the PCFM. Also, under the RPFM, the manufacturer’s production and the profit of the whole supply chain would be increased when the manufacturer makes the second financing. Similar conclusion is reached under the PCFM. Finally, numerical study was given to demonstrate the conclusions.