Research On Two-Stage Ordering Strategies Based On Inventory Financing

Some small and medium-sized enterprises which need financing are difficult to receive a bank loan due to their low credit rating or lacking in real states and third party guarantee. However, in developed countries like America,70% of guarantees come from movable property such as accounts receivable or inventory. Among them, Inventory financing is the financing business of small and medium sized enterprises which considered raw materials, semi-finished products and finished products as pledge. It helps these enterprises ease the shortage of funds caused by operational barriers to a certain extent. For banks, inventory financing can effectively reduce the risk of bank credit, improve bank credit assets quality and widening the service scope.The impact of future uncertain state on a certain period of demand which shown periodic characteristics was considered in the paper. The first stage of demand is stable, but because of some aspects’influence like product updating, whether a policy or a bill can pass or the sales strategy, the demand in the second stage shows a different state. The order strategy of financial supply chain consisting of a retailer and a bank was researched in the paper under the two stage demand situation. The retailers cannot afford completely to procure goods, which needs the bank to provide inventory financing business to solve financial problems.In this paper, the two-stage ordering problem of the inventory financing was proposed based on the background. The related references about inventory financing and bank risk management are introduced first.Retailer’s order strategy model without stage division and two-stage order strategy model were built in the environment of two-stage demand. The retailer’s risks and benefits of bank loans under the two strategies were analyzed and compared in chapter 3. Retailer’s income fluctuation at two ordering policies are analyzed and compared. We improve that retailer’s income fluctuation under ordering policy with stage division is lower than that under ordering policy without stage division. Meanwhile, Bank loan risk is lower.Bank’s pricing strategy model without stage division and two-stage order strategy model were built in the environment of two-stage demand. The combination of optimal decision of the bank is given. And we prove that bank’s loan-to-value ratios is increasing with the demand state. The bigger the difference between two demand state, The greater change of the bank’s loan-to-value ratios. Retailer’s default rate have an effect on bank’s loan-to-value ratios decision, bank’s loan-to-value ratios decision is easier influenced under ordering policy with stage division.This paper riches the research on the two-stage demand, retailer’s ordering policy and bank’s pricing decision, which provide advice on inventory financing and risk management.