A Demonstration Experiment of a Supply Chain Coordination with a Capital-Constrained Supplier under Yield Uncertainty

Abstract

　We consider a supply chain coordination composing one manufacture and one supplier, where the supplier is capital-constrained and the supplier’s production yield is random. Facing shortage of capital, the supplier can use two funders to facilitate the supplier’s production: bank loan from a bank, or advance payment from the manufacturer. Wen Ding and Guohua Wan find the optimal solutions in the above problem. However, their issue doesn’t explain sensibility analysis and estimation method in demonstration experiment well. In this paper, we deal with demonstration experiment to conform Wen Ding and Guohua Wan’s results. Furthermore, we propose to use the buy-back contract for the manufacture to share the production risk and stimulate the supplier to increase the production yield.