Financing and coordinating the supply chain with a capital-constrained supplier under yield uncertainty

We consider financing and coordinating issues in a supply chain with one supplier (she) and one manufacturer (he), where the supplier is capital-constrained and her production yield is random. Facing shortage of capital, the supplier may use two financing sources to facilitate her production: bank loan from a commercial bank, or advance payment from the manufacturer. Taking the supply chain with centralized control as a benchmark, we analyze the...