Optimal Financing Strategy in a Dual-Channel Supply Chain with Agricultural Product

Liurui Deng () and Xiwei Yu
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Liurui Deng: Business School, Hunan Normal University, Changsha 410081, China
Xiwei Yu: Business School, Hunan Normal University, Changsha 410081, China

Mathematics, 2024, vol. 12, issue 18, 1-41

Abstract: This study models a two-stage agricultural supply chain consisting of a financially constrained manufacturer of agricultural products and a financially stable retailer. We examine two supply chain structures: traditional and dual channel. Our analysis centers on the effects of consumer green preferences, consumer sensitivity to the freshness of agricultural products, and substitution rate between green and non-green agricultural products on the profitability of supply chain members. The purpose of this work is to study the optimal financing strategy for companies producing both regular and organic products simultaneously. We analyze optimal financing strategies for the manufacturer using three models: bank financing, internal debt financing, and internal equity financing. Our results indicate that in both traditional and dual-channel supply chains, increased consumer green preferences or greater sensitivity to the freshness of agricultural products improve supply chain profitability, while a higher substitution rate between green and non-green products reduces profits. Additionally, the manufacturer prefers internal debt financing when consumer environmental awareness is low. Conversely, as consumer environmental awareness increases, internal equity financing becomes more profitable. These findings offer valuable insights for agricultural product manufacturers facing financial constraints, assisting them in selecting the most appropriate financing model.

Keywords: agricultural product supply chain; dual-channel supply chain; financing strategy (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2024
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