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

Zhao Deli (), Zhang Baofeng () and Wang Zongshui ()
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Zhao Deli: School of Management, University of Science and Technology of China, Hefei230026, China
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

Journal of Systems Science and Information, 2017, vol. 4, issue 5, 408-418

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.

Keywords: capital constraint; two ordering opportunities; bank credit; newsvendor (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/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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