Strategy Study Of Confirming Warehouse Financing Based On Banks With Downside Risk Constraint

With the rapid development of supply chain management,it cannot satisfy the fierce competition between companies furthermore only through the cooperation of material flow,the key to improve the competitiveness of company’s supply chain is the integration of cash flow,material flow and information flow.Supply chain finance arises due to the supply chain financial flow issues are more and more emphasized by companies and researchers.The core firm in a traditional supply chain always occupy the cash flow of its upstream and upstream SMEs(Small and Medium Enterprise)for its own benefits,for example,through delaying the payment terms of suppliers,requesting downstream retailers to pay procurement cash in advance and everything like these to make their gains.All these lead to a very high cash constraint for SMEs.This situation not only has a negative effect on SMEs themselves but also as well as the stability of the whole supply chain.The research background of this thesis is Confirming Warehouse Financing mode which is one of the regular modes of supply chain finance.The participators includes Bank,Manufacturer(Core Company),Retailer(SME).Through analyzing the actual process of classic Confirming Warehouse Financing mode,we obtained that the main risk point of bank comes from the core company’s buy-back default.This paper analyses the retailer’s order quantity and loan limit issues under a hypothesis of banks with downside risk constraint,the study shows that it is dependent between order limitation and risk attitude of bank.By using mathematic model and numerical simulation,we found: with the degree of risk aversion of bank decreasing,the influence of bank’s order limitation is also weakening,eventually keeps a steady state in supply chain.The paper also analyze how the ratio of market demand to retailer’s total order quantity influence the performance of supply chain,and the result shows that the ratio will has a quite great influence on whole supply chain when it between a small interval.