Industrial Engineering Journal

Industrial Engineering Journal ›› 2021, Vol. 24 ›› Issue (4): 76-82,111.doi: 10.3969/j.issn.1007-7375.2021.04.009

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Start-up's Operational Decision-making under Random Supply and Demand and Capital Constraints

PENG Hongguang1, NIE Xueli1, LIU Yunxia1,2   

  1. 1. School of Economics and Management, Zhejiang University of Science and Technology, Hangzhou 310023, China;
    2. School of Economics and Management, Southwest Jiaotong University, Chengdu 610031, China
  • Received:2020-03-08 Published:2021-09-02

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Abstract: A supply chain consisting of an OEM supplier, a start-up and demand market is considered. The start-up under capital constraints meets market demand by investing in capacity building or purchasing from the OEM supplier. The optimal decisions of the start-up's production capacity and ordering quantity are investigated with the goal of shareholders' equity value maximization. The results show that when the loan volume is unlimited, as the initial self-owned funds of the start-up gradually increase, the optimal production capacity of the start-up remains unchanged first, then gradually increases, and finally declines; and neither adopting entire outsourcing strategy when the capital is scarce nor adopting entire self-making strategy when capital is almost sufficient is the best choice for the start-up.

Key words: start-up, capital constraints, optimum productivity, debt financing, shareholders' equity value

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