Ordering Decisions In A Capital-constrained Supply Chain With RFID Applications

The turbulence of the global economic market has brought great challenges to retailers.More retailers begin to look for new breakthrough points in internal operations,and the reduction of inventory loss has become a new source of profit for enterprises.In recent years,RFID(Radio Frequency Identification),as the key technology of the Internet of things,has been considered as an effective way to reduce inventory loss.However,the applications of RFID effectively reduce the inventory loss rate but also inevitably lead to greater operational costs of the supply-chain enterprises,especially the medium and small sized enterprises with limited capital.Therefore,in the case of considering the adoption of RFID,how to make the optimal operation decisions has become the major concern of the capital constrained enter prises.In this paper,we consider a two-echelon supply chain involving a capital-sufficient manufacturer and a capital-constrained retailer.Based on the wholesale price contract,we establish the Stackelberg game models under two different financing situations: trade credit financing and bank credit financing.We then proceed backwards to derive the optimal decisions in both situations,and analyze the influence of RFID-related parameters on the optimal decisions and profits.We further compare the optimal decisions and expected profits of supply chain members under two financing situations.Results show that the perfect equilibrium exists in both financing types,and the optimal decisions and profits are affected by the RFID-related parameters.By comparing the optimal decisions under two financing types,it is found that the manufacturer's optimal wholesale price and the retailer's optimal order quantity under trade credit financing are both higher than those under bank credit financing.By comparing the profits of supply chain members under two financing types,it is found that only when both the manufacturer's production cost and the RFID unit tag cost are low,the manufacturer's profit under trade credit financing will be higher than that under bank credit financing,and the retailer's profit under the bank credit financing is always higher than that under trade credit financing.Numerical simulation verifies the theoretical results.By considering ordering decisions under two financing types,this paper can enrich the relevant research about RFID and the capital-constrained supply chain.At the same time,it can also provide effective guidance for each enterprise in the capitalconstrained supply chain to make operational decisions under the RFID application environment.To sum up,this paper makes sense both in theory and in practice.