Financing decision for a remanufacturing supply chain with a capital constrained retailer: A study from the perspective of market uncertainty

This paper considers a remanufacturing supply chain where the retailer is subjected to a capital constraint. As compared with existing literature, a fundamental difference of this paper lies in that it develops an analytical examination of the financing decisions for the remanufacturing supply chain in terms of the market uncertainty. With the study, some interesting and important results and managerial insights are derived. For example, but not limited to, it is found that: (i) when the market uncertainty is relatively low or high, trade credit financing (TF) can always push both the remanufacturer to collect more used products and the retailer to order more products, as compared with the bank loans financing (BF). (ii) There exists a threshold on the retailer's initial capital below which the retailer prefers TF to BF, and the threshold varies with different market uncertainties. In addition, the remanufacturer receives a higher profit with TF than with BF in the market with relatively low uncertainty. (iii) Coordination can be attained in the financially constrained remanufacturing supply chain by revenue sharing with the retailer bearing no cost of the collection effort. Furthermore, numerical analysis reveals that coordination can be achieved with more flexibilities in the supply chain when the market uncertainty is relatively low. Moreover, the coordinated contract has a stronger efficiency improvement effect with TF than with BF. With the extended numerical studies, it is exhibited that the above findings are robust to a good extent.