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Academic Lecture: Financing contract manufacturer under early payment to strengthen trade
2015-4-20
Time: 10:10-11:40AM, April 22nd, 2015

Location: Room 335, School of Economics and Management

Speaker: Prof. CHEN Xiangfeng, Fudan University, Shanghai 

Abstract: This paper investigates the operational and ?nancial decisions in a supply chain, in which a dominant retailer purchases the product from a capital-constrained contract manufacturer, and sells the product in retail market under consignment contract. The capital-constrained manufacturer can raise capital to cover product cost in two ?nancing options, bank credit and early payment, an innovative ?nancing model. More specially, we set two scenarios of Retailer Priority and Manufacturer Priority to highlight who has the right of ?nally choosing ?nancing option. Our model shows that there exists optimal decisions under both bank credit and early payment; It also shows that both bank credit and early payment can be ?nancing equilibrium under both cases of Retailer Priority and Manufacturer Priority. And early payment is ?nancing equilibrium when the product cost is small-medium, otherwise the bank credit is the ?nancing equilibrium. Furthermore, we ?nd that the region of early payment as ?nancing equilibrium under Manufacturer Priority, a Pareto zone in which both retailer and manufacturer bene?t from early payment, is narrower than that under Retailer Priority, where only retailer bene?ts from early payment. Finally, we also o?er a lots of numerical experiment to support theoretical results and extend to study how market variability has an impact on ?nancing equilibrium in the supply chain under both cases of Retailer Priority and Manufacturer Priority.
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