Joint decision of financing and ordering in an emission-dependent supply chain with yield uncertainty

This paper studies the manufacturer's financing and ordering decisions and the supplier's price-making decision with or without carbon abatement investment in a two-echelon supply chain consisting of a dominant supplier and a manufacturer, when the product yield is uncertain and consumers have low carbon preferences. The results show that under the cap-and-trade scheme, regardless of whether investment in carbon emission reduction are considered, the manufacturer's financing decision depends on the initial working capital. Further, the yield uncertainty and carbon abatement investment affect the selection of financing equilibrium. The ordering quantity and performance of supply chain members decrease with the yield uncertainty, but the supplier's wholesale price has no relation to the yield uncertainty and low-carbon preference. We also compare the results of different financing modes with or without carbon emission reductions, and we analyse the influences of important parameters on decisions and performance of supply chain members. The numerical results are used to verify the theoretical results.