Pareto-Optimal Coordination and Financing Selection for a Capital Constrained Supply Chain Under a Buyback Contract

This paper focuses on financing schemes for a supply chain with high salvage values for unsold products. Combining the buyback contract with partial credit guarantee (PCG) contract and trade credit (TC) contract, we propose two financing schemes, PCG-Buyback and TC-Buyback, to provide flexible financing services for the capital-constrained retailer and obtain equilibrium strategies of each supply chain member. Furthermore, for PCG-Buyback, this paper obtains a Pareto coordination frontier consisting of the credit guarantee coefficient and buyback price at different initial capital levels, which is more flexible to achieve supply chain coordination. Finally, we analyze the manufacturer's strategic choices of PCG-Buyback and TC-Buyback in terms of the credit guarantee coefficient, buyback price, and financing interest rate. The results show that PCG-Buyback is the optimal financing scheme for the manufacturer when both the credit guarantee coefficient and buyback price (or financing rate) are low, otherwise, TC-Buyback is the dominant strategy