Financing Mode Selection in a Fresh Product Supply Chain with Freshness Losses

Source abstract

Fresh-product suppliers often rely on e-commerce platforms for sales while facing capital shortages for production and freshness preservation. To alleviate this financing constraint, the supplier can choose between financing options: purchase order financing (POF) and platform financing (PF). We develop a Stackelberg game model for a fresh product supply chain (FPSC) composed of a supplier and an e-commerce platform. The findings indicate that when the interest rate for POF is equal to or higher than that of PF, the supplier should always choose PF. Moreover, this optimal choice can create a mutually beneficial outcome for the supplier, the platform, and consumers. Conversely, when the PF interest rate is higher than that of POF, the supplier’s financing decision depends on the freshness-keeping cost coefficient and the unit production cost. In particular, when the unit production cost is sufficiently high, PF can generate a triple-win outcome for the supplier, the platform, and consumers. Further analysis shows that, when the PF interest rate is higher than that of POF, the higher the platform service cost coefficient, the more likely the supplier is to choose PF. By contrast, when consumers are more sensitive to platform services, the likelihood of the supplier choosing POF increases. Furthermore, a higher degree of the platform’s altruistic preference increases the likelihood that the supplier will prefer POF.