Abstract—Providing theefficient financing channel between capital-constraint small-medium enterprise(SME) and finance institute is one of the important aspects of the supply chainfinancing. Risk control of financing for SME is crucial for finance institute.In the mean time, order-lead time also plays important role in SCM. Based onthe considerations, the paper extends the optimal order quantity and order timeof traditional newsvendor model with comprehensive capital constraint and riskcontrol and time-sensitive factors. The paper uses the value-of-risk (VaR) asthe risk measurement to establish the risk constraint. Further, the paperanalyzes the equilibrium and the best response function of the loan rate andthe owned capital via numeric example and diagram. It proves the intuitive factthat higher salvage value or lower holding cost leads to less loan rate and lessowned capital. Last, the paper points out the mathematical- analysis directionfor future research.
Keywords-SupplyChain Managemen; Newsvendor Model; Value at Risk; Capital Constraint;Equilibrium
1. Introduction
ThisTraditional newsvendor model is to solve the optimal inventory for singleproduct under the stochastic demand in a single period: In T0, the newsvendordetermines the inventory size according to the market demand and the constantwholesale price; In T1, the newsvendor sells the products to customer withconstant retail price. If he cannot sell out all, the remaining is liquidizedwith little value. The model is used widely in the inventory decision for thetime-sensitive product, such as fashion and seasonal clothes. Therefore, itattracts many scholars to extend the research. Moutaz[1] and Silver[2] reviewsthose extended models between year 1998 and 1999, including multi-objectfunction and utility functions as the optimal goal, varieties of supplier’sprice strategy, varieties of newsvendor price and discount strategies, randomyield function and dynamic demand in different phrases, etc. Those researchesis based on the presumption of no capital constrains, so that newsvendor canplace any order ac-cording to the optimal result.
In the recent 10 years, many scholars extend themodel with the financing issue. Buzacot[3] compares the difference of optimalinventory decision under capital re-straint and without capital restraint. Inaddition, he analyzes how the finance institute determines its loan rate tomaximize its profit and provide the relationship amongst optimal inventory andcapitaland loan rate. Maqbool[4] reveals that the total profile of both newsvendor andthe finance institute can maximize by using the non-linear loan approach. Thoseresearches are using the expected profit or expected cash flow as the optimalgoal. However, as we known, the better profit, the worse deviation from theprofit. Therefore, those models are not so enough for some situations when riskis strongly averse by newsvendor.