The Strategy of Inventory Financing with Incomplete Information Based on Entropy

Abstract

This paper mainly studies the retailer's reorder quantity and the profits of retailer, supplier and entire supply chain with inventory financing under incomplete information based on entropy. First we establish a inventory financing model to derive the reorder quantity of retailer under centralized supply chain and decentralized supply chain respectively. Then introduce the maximum entropy method to predict the market demand distribution. Fianlly, the results of our experiment indicate that information value can be higher when the market demand fluctuates severely and the best reorder quantity decision for retailer should be considered from entire supply chain except the fluncation of demand is big under incomplete information, while the retailer's decentralized decision under incomplete infromation will lead the entire supply chian to the worst profit.