Optimal Policy of Manufacturer in Warehouse Confirming Contract

The warehouse confirming is one emerging model of supply chain finance in China. With the manufacturer's promise to redeem, the retailer obtains loan quota from the bank for purchase of goods. Warehouse confirming is considered as a special supply chain contract in this paper. In this contract, not only the wholesale price but the order quantity is decided by the manufacturer. At the end of the selling season, the retailer will not pay for the unsold goods. From the point of view of newsvendor model, the equation groups which decide the optimal policy of the manufacturer have been given. The capital profit is considered, and the expect profit of the system is connected with the wholesale price. The expected profit of the manufacturer and the supply chain are optimal only when the expected profit of the retailer is equal to the reservation.