Abstract:

According to the prepayment financing model and in a supply chain that lacks capital, a bilayer structure is established that contains Manufacturers (M) and Retailers (R). This structure is a simple supply chain decision model without considering the defective product rate, inventory cost and financing cycle length. When market demand is uncertain and retailers face capital constraint, and retailers adopt the prepayment financing, the quantity of order will change, and the profit of either manufacturer or retailers will also change. Through comparing the order quantity and the expected return when the retailer has different quantity of funds under the condition of finance and the value of the order quantity of the retailer's own capital with cycle, it is indicated that the retailer's financing and ordering decision will change with the changes of its own fund and the market demand. And it is verified that the financing can increase the revenue of the retailer and supply chain, and can bring as soon as possible an optimal yield of the total supply chain product and effectively meet the consumer demand.

Key words: prepayment financing, capital constraint, optimal order quantity, supply chain finance