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A Bank Credit Model with Capital-Constrained Newsvendor Under Two Ordering Opportunities

Author

Listed:
  • Zhao Deli
  • Zhang Baofeng

    (School of Management, University of Science and Technology of China, Hefei230026, China)

  • Wang Zongshui

    (School of Economics and Management, University of Chinese Academy of Sciences, Beijing100190, China)

Abstract

This paper proposes a financing system consisting of a bank under Mean-Variance criterion and a capital-constrained retailer, where the bank offers an unlimited credit to the retailer. The demand is assumed to be stochastic. The newsvendor is allowed to make an emergency order with a minimum reorder quantity threshold (RQT). It shows that under RQT, the newsvendor has different reorder strategies. The optimal primary order quantity and interest rate are derived, sequentially. Extension under perfectly competitive capital market is given. The mathematic model reveals that RQT and reorder price have significant effect on the optimal strategies.

Suggested Citation

  • Zhao Deli & Zhang Baofeng & Wang Zongshui, 2017. "A Bank Credit Model with Capital-Constrained Newsvendor Under Two Ordering Opportunities," Journal of Systems Science and Information, De Gruyter, vol. 4(5), pages 408-418, October.
    • Handle: RePEc:bpj:jossai:v:4:y:2017:i:5:p:408-418:n:2
    DOI: 10.21078/JSSI-2016-408-11
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    References listed on IDEAS

    as
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    4. Panos Kouvelis & Wenhui Zhao, 2012. "Financing the Newsvendor: Supplier vs. Bank, and the Structure of Optimal Trade Credit Contracts," Operations Research, INFORMS, vol. 60(3), pages 566-580, June.
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