Abstract: Loaning from banks is one of ways for many enterprises to obtain financial support for investment. A research is conducted for a two-level supply chain composed of a supplier and a cash-constrained retailer under uncertain demands. The retailer is cast as a newsvendor who faces financial constraint and needs to borrow money from a bank. For such a supply chain, the traditional contracts such as revenue-sharing and buyback are not suitable. Thus, a new coordination contract called supplier-warrant contract is proposed. Under such a contract, decision-making behavior of the supplier, the cashconstrained newsvendor, and the bank is analyzed. Results show that, with such a contract, the newsvendor's optimal ordering quantity can be increased. A numerical study is used to show how the parameters affect the retailer's optimal ordering quantity and the profits of members in the supply chain and the whole system. 

Key words: newsvendor's financing problem, supplier-warrant contract, supply chain coordination