Optimal Pricing Decision in Finance-constrained Supply Chain Considering Deposits and Loans of the Bank Based on the Advance Payment
CAO Bing-bing, FAN Zhi-ping, YOU Tian-hui, LIU Chun-yi
2020, 28 (8):
In reality, supply chain members may confront with the fund shortage problem because of un-received payment, prepayment and inventory backlog, and need to apply for bank loan to ensure their benign operations. Supply chain members may deposit the idle fund for bank interest when they have the sufficient capital such as sales revenue and profit, for example, the retailer may deposit the sales revenue by the rate for fixed deposit by installments, the manufacturer may deposit the profit by the interest rate for benefit. The advance payment scheme refers to a way that the retailer transfers the payment to the manufacturer before the production process of the manufacturer. In addition, there are two supply chain power structures. Under the consideration of deposits and loans of the bank based on the advance payment scheme, how to determine the optimal policy of wholesale price and margin price for the different supply chain power structures in finance-constrained supply chain, it is a worthy and significant problem.
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In this paper, it is assumed that the supply chain comprises a manufacturer and a retailer, and one of them is finance-constrained or the leader of the supply chain. The following four situations are considered: the manufacturer is finance-constrained and the leader of the supply chain (MS-MC), the manufacturer is finance-constrained and the retailer is the leader of the supply chain (RS-MC), the retailer is finance-constrained and the manufacturer is the leader of the supply chain (MS-RC), the retailer is finance-constrained and the leader of the supply chain (RS-RC). Furthermore, the demand function and profit functions are built, and the optimal policies of supply chain members are determined for four situations. Then, the optimal wholesale price of the manufacturer and the optimal margin price of the retailer are analyzed for four situations, and the impacts of the bank rates, i.e., the rate for fixed deposit by installments, deposit interest and loan interest, on the optimal pricing policies and profits of the supply chain members are investigated. In addition, the comparison analysis for the following four cases is conducted: comparing the optimal policies and the impacts of bank rates on the optimal policies and profits of supply chain between situations MS-MC and RS-MC, MS-RC and RS-RC, MS-MC and MS-RC, RS-MC and RS-RC.
Several important results are shown through the theoretical analysis. The rate for fixed deposit by installments, deposit interest and loan interest can affect the optimal policies and profits of supply chain members to varying degree for four situations MS-MC, RS-MC, MS-RC and RS-RC. The effect mechanism is related to the finance-constrained objectives and the supply chain power structures. Compared with the supply chain power structures, the effect mechanism is more related to the finance-constrained objectives. Furthermore, five useful managerial insights are obtained for guiding the decision-maker in practice. In addition, it is also shown that the advance payment can relieve the manufacturer's pressure on the finance, but intensifies the degree of the financial constraints of retailer.