Information acquisition, disclosure, and financing strategy in a capital-constrained supply chain

Abstract

We develop a supply chain including a manufacturer and a capital-constrained retailer to investigate the interaction between information acquisition strategy (acquisition/non-acquisition), information disclosure strategy (voluntary disclosure/mandatory disclosure), and financing strategy (trade credit financing/external financing). First, we study the optimal information acquisition strategy, and find that the capital-constrained retailer would acquire more accurate demand information when the information acquisition cost is below the threshold value, which is different under different financing options and information disclosure ways. Next, we study the optimal information disclosure strategy, and find that the capital-constrained retailer would disclose the acquired information when the market potential is below a threshold value. The capital-constrained retailer is more willing to acquire information under voluntary disclosure, and voluntary disclosure is profitable when the information acquisition cost is below the threshold value. Then, we study information acquisition incentive under different financing options, and find that the capital-constrained retailer under external financing is more likely to acquire more accurate demand information. Finally, we study the optimal financing strategy. We find that with information acquisition, trade credit financing is optimal if and only if the specified condition is satisfied under different information disclosure ways; while with information non-acquisition, trade credit financing is always optimal. We also employ a numerical method to validate the main results. These findings help the capital-constrained supply chain facing the uncertain demand market to improve operational efficiency.