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  • [ May 10, 2019]

    Sustainability Building of an Agricultural Supply Chain with a Capital-Constrained Farmer in Developing Economies

  • Speaker:
    Yulan Wang
    May 16th, 2019
    Room 119, Wenshi Building
    Jie Song
  • Abstract
  • We consider an agricultural supply chain consisting of a capital-constrained smallholder farmer and an intermediary platform. The smallholder farmer sells agricultural products through the intermediary platform but lacks financial resources for sustainable production. In addition to the traditional bank financing (provided by a bank), the creditworthy intermediary platform may also directly provide loans to the farmer (known as direct financing) or serve as a guarantor if the farmer has insufficient creditworthiness to obtain bank loans (known as guarantor financing). We first consider the case where the unit commission fee charged by the platform is endogenized and find that the farmer produces the most under direct financing and the least under bank financing. Interestingly, under both guarantor financing and direct financing, the smallholder farmer's production level can be even higher than that in a centralized system. Moreover, the decentralized supply chain can be coordinated under direct financing when the farmer's production cost is relatively low. We show that the intermediary platform prefers financing the farmer directly when the farmer's production cost is low and would encourage the farmer to raise funds from the banking market when such cost is high. However, when the production cost is moderate, it is indifferent between direct financing and guarantor financing. The farmer always prefers bank financing while the preference of the whole supply chain is structurally similar to that of the intermediary platform. When the intermediary platform is also financially constrained, guarantor financing can be preferred by both the intermediary platform and the supply chain.
  • Biography
  • Yulan Wang is currently an associate professor in the Department of the Logistics and Maritime Studies at the Faculty of Business of the Hong Kong Polytechnic University. She received her Ph.D degree in Business Administration from Duke University. She obtained both her BS and MS degrees from Shanghai Jiao Tong University. Her research work has been published in leading academic journals such as Management Science, Operations Research, Manufacturing & Service Operations Management, Production and Operations Management, among others. Her research interests include supply chain management, sustainability operations, and the behavioral issues in operations management. She serves as the senior editor for  Production and Operations Management and the associate editor for Omega. She is the editorial review board member of Production and Operations Management and the editorial advisory board member of Transportation Research - Part E.