Decision Analysis of Conditional Risk Method Based on Accounts Receivable Financing Mode

Abstract

In order to study how factoring mode is involved in easing the flow of funds in the supply chain, such as upstream and downstream enterprises, etc. On the basis of accounts receivable financing mode, we use the measurement criteria of conditional risk method to formulate decision criteria. Then, it is assumed that the market demand will fluctuate randomly and consider the default risk of the downstream enterprises, and establish a conditional risk model consisting of three parties of a single factoring, a single retailer and a single product supplier. After balancing the pros and cons, we get the optimal rate of factoring, the optimal ordering quantity of retailers and the optimal wholesale price of product suppliers. The results show that under certain conditions, the use of factoring model can make the three parties optimize the operation of funds under the premise of effectively avoiding the risk, and all achieve the best goal.