Research on Retailer's Optimal Ordering Policy under Guaranteed Pick-up and Prepayment Financing

This research studies the guaranteed prepayment scheme based on the new supply chain financing mode of GREE GROUP to its downstream retailers. The optimal financing and ordering decisions are explored in a one-supplier-one-retailer supply chain system. The paper also discusses the optimal ordering decisions under integrate supply chain as comparison model. The model is built based on Newsvendor model with retailer's limited operating capital whereas the supplier's working capital is sufficient. Through theoretical analysis this model, we find that the guaranteed pick-up prepayment financing can not only solve the financing problem of the retailers with insufficient budget, but also encourage the retailers with enough funds to increase their orders, so as to achieve a better order quantity for the whole supply chain. Nevertheless, through the numerical experiment, this new supply chain financing mode can be applied to the situation that the supplier is the core enterprise and occupies most of the revenue in the supply chain, and it can realize the win-win situation among suppliers, retailers and third-party financial institutions.