Strategy of Capital-Constrained Retailer with Trade Credit Contract

A risk-averse retailer is considered in the paper. The retailer faces a nonnegative random demand and the supplier applies the trade credit contract for the risk-averse retailer with budget constraints. Different from the existing research, in a conditional value-at-risk (CVaR) framework, the optimal ordering quantity of retailer is obtained. It is found that the optimal ordering quantity decreases w the degree of risk aversion increases. Furthermore, we analyze the effect of the initial budget and the wholesale price on the order quantity decision. Finally, to comparing with the existing results the theoretical analysis and numerical examples are discussed.