Joint supply chain finance and robust order decision with unknown distribution of demand

Retailer intermediation in supplier finance, provided by the bank to the supplier, is an effective way to deal with the problem of the supplier's capital constraints, in an effort to avoid the negative impact on the profit of retailer and the whole supply chain due to the capital insufficiency of the supplier. With the retailer intermediation in supplier finance, the optimal decision model for supply chain and the robust ordering model for retailer are established where only the mean and variance of demand are known. The optimal borrowing of supplier, robust ordering quantity of retailer, optimal wholesale price, and optimal discount percentage are presented. Numerical experiments are carried out which validate the robustness and efficacy of retailer's ordering decision achieved by robust optimization. Furthermore, it is found by comparing with the model with known demand distribution, the robust ordering decision is superior to the optimal expected profit ordering strategy under some situations even if the perfect information is available.