Financing newsvendor inventory. (English) Zbl 1151.91497

Summary: If the cost of borrowing is not too high, the capital-constrained newsvendor borrows funds to procure an amount that is less than would be ideal. The lender charges an interest rate that decreases in the newsvendor’s equity. Furthermore, we derived a non-linear loan schedule that coordinates the channel.


91B28 Finance etc. (MSC2000)
90B05 Inventory, storage, reservoirs
Full Text: DOI


[1] Archibald, T.; Thomas, L.; Betts, J.; Johnston, R., Should start-up companies be cautious? inventory policies which maximize survival probabilities, Management science, 48, 1161-1174, (2002) · Zbl 1232.90264
[2] Babich, V.; Sobel, M.J., Pre-IPO operational and financial decisions, Management science, 50, 935-948, (2004) · Zbl 1232.90219
[3] Birge, J.R., Optio methods for incorporating risk into linear capacity planning models, Manufacturing & service operations management, 2, 19-31, (2000)
[4] Bounds, G., Pen maker struggles with too much demand, Wall street journal, November, 14, (2006)
[5] Buzacott, J. A.; Zhang, R., Inventory management with asset-based financing, Management science, 24, 1274-1292, (2004)
[6] Cachon, G., Supply chain coordination with contracts, () · Zbl 1232.90173
[7] Gaur, V.; Seshadri, S., Hedging inventory risk through market instruments, Manufacturing & service operations management, 7, 103-120, (2005)
[8] Huchzermeier, A.; Cohen, M.A., Valuing operational flexibility under exchange rate uncertainty, Operations research, 44, 100-113, (1996) · Zbl 0847.90067
[9] Kogut, B.; Kulatilaka, N., Operational flexibility, global manufacturing, and the option value of a multinational network, Management science, 40, 123-139, (1994)
[10] Kouvelis, P.; Li, C.-L., Flexible and risk sharing supply chain contract under price uncertainty, Management science, 45, 1378-1398, (1999) · Zbl 1231.90047
[11] L. Li, M. Shubik, M. J. Sobel, Control of dividends, capital subscriptions, and physical inventories, Working Paper, Yale School of Management. http://ssrn.com/abstract=690864, 1997
[12] X. Xu, J.R. Birge, Joint production and financing decisions: Modeling and analysis, Working Paper, Northwestern University, October 2004
[13] Xu, X.; Birge, J.R., Equity valuation, production, and financial planning: A stochastic programming approach, Naval research logistics, 53, 641-655, (2006) · Zbl 1106.90028
[14] Y. Xu, J. Zhang, On the selection of supply chain coordinating contracts: The role of capital constraints, Working Paper, University of Miami, December 2006
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. It attempts to reflect the references listed in the original paper as accurately as possible without claiming the completeness or perfect precision of the matching.