Inventory decisions and channel coordination of supply chain with a capital-constrained retailer

This paper investigates inventory decisions and channel coordination of a capital-constrained retailer in relation to credit sale. Firstly, the optimal inventory decision is given under centralized system; Then, the retailer´s optimal inventory decision under decentralized system without and with contract is derived with Kuhn-Tucker method, respectively, and the conditions to coordinate supply chain are developed; Finally, the performance of all members in the system and the optimized contract parameters in different states are illustrated by numerical examples, and the sensitivity analysis for the inventory decision is conducted from the view of retailer´s owned capital, capital yields of supplier(retailer), and demand uncertainty, respectively.