Abstract:

The mode of supply chain enterprises to provide productive financing and traditional financing from outside financial institutions (such as banks) has its own advantages, which can improve the efficiency of supply chain operation. In a pull supply chain where the supplier is in financial constraint, supply chain member enterprises being the players, a dynamic game model is established to investigate the improvement to supply chain efficiency and the members’ profit by advance payment. Equilibrium strategies under bank financing and advance payment are obtained respectively, and advantage of advance payment compared with bank financing is analyzed. The results show that when there is an interval and the wholesale price is in this interval, the retailer is able to incent the supplier to opt advance payment scheme and achieve Pareto improvement for both players and improve the efficiency of the whole supply chain.

Key words: capital constraint, advance payment, supply chain financing