Joint Decision of Order Allocation and Lending in the Multi-Supplier Scenario Pof

As an effective financing method for suppliers to solve capital shortage problem before production, purchase order financing (POF) has been widely used. However, in current practices of POF, the separation of order allocation decision of the focal firm and lending decision of the financial institution may inevitably cause the multi-supplier scenario POF business to fall into the dilemma of failed or non-optimal. To deal with this problem, we first design a joint decision-making process to address the deficiencies of separate decision of order allocation and lending, namely the information sharing the mutual participation between the focal firm and the financial institution. Then, based on the interest analysis of all the parties involved in POF, as well as the decision-making processes, we construct mathematical models for both the joint and separate decision of order allocation and lending. After that, an improved genetic algorithm (GA) is designed to solve the problem and a numerical study is used to verify the outperformance of the joint decision model over the separate decision model. The result shows that the joint decision of order allocation and lending can increase the expected payoff of both the focal firm and the financial institution in the multi-supplier scenario POF