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Optimal Strategies of Capital-constrained Supply Chain with Credit Guarantee Financing

Nina Yan, Chongqing Liu, Hui Zhang


In this paper, we design a supply chain finance (SCF) system composed of a capital-constrained retailer, a manufacturer and a commercial bank and analyze the optimal strategies with credit guarantee contract. Considering different financing conditions, we formulate the Stackelberg model in which commercial bank acts as a leader, manufacturer acts as a sub-leader and retailer acts as a follower. We analyze the optimal loan rate of the commercial bank, the optimal order of the retailer and the optimal wholesale price of the manufacturer, respectively. We make comparative analysis of optimal strategies among different financing scenarios, including the traditional supply chain without capital constraint, supply chain financing with credit guarantee and supply chain without credit guarantee. Finally, we conduct numerical examples to examine the results of theoretical analysis. It is concluded that the wholesale price contract based on credit guarantee would enhance the retailer’s optimal order and thus increases the total expected profit of the entire supply chain compared with financing without credit guarantee.


supply chain finance, Stackelberg strategy, game theory, credit guarantee, stochastic optimization

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