Product flexibility of competitive manufactures: the effect of debt financing
The goal of this paper was to examine the effect of debt financing on competitive manufactures’ product flexible capacity decisions. For this purpose, two competing firms were considered to invest in product flexible capacity and product dedicated capacity, respectively, each of them produced two pr...
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| Veröffentlicht in: | Annals of operations research 2021-12, Vol.307 (1-2), p.53-74 |
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| creator | Cao, Guozhao Wang, Zhan |
| description | The goal of this paper was to examine the effect of debt financing on competitive manufactures’ product flexible capacity decisions. For this purpose, two competing firms were considered to invest in product flexible capacity and product dedicated capacity, respectively, each of them produced two products. Before investing in the capacity, each firm issues the optimal amount of debt. The product flexible capacity decision models of both levered firms and unlevered firms were built based on the competitive newsvendor model. Then the relationship between debt financing and product flexibility decision was discussed. The results indicated that under the competitive setting, the level of product flexibility decreased with debt as well as the difference of demand between the two products. Furthermore, the optimal capacity investment and debt of levered firms decreased with product flexibility. Finally, the firm could benefit from higher debt and total capacity investment when the product profit margin is large. |
| doi_str_mv | 10.1007/s10479-021-04132-x |
| format | Article |
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For this purpose, two competing firms were considered to invest in product flexible capacity and product dedicated capacity, respectively, each of them produced two products. Before investing in the capacity, each firm issues the optimal amount of debt. The product flexible capacity decision models of both levered firms and unlevered firms were built based on the competitive newsvendor model. Then the relationship between debt financing and product flexibility decision was discussed. The results indicated that under the competitive setting, the level of product flexibility decreased with debt as well as the difference of demand between the two products. Furthermore, the optimal capacity investment and debt of levered firms decreased with product flexibility. Finally, the firm could benefit from higher debt and total capacity investment when the product profit margin is large.</description><identifier>ISSN: 0254-5330</identifier><identifier>EISSN: 1572-9338</identifier><identifier>DOI: 10.1007/s10479-021-04132-x</identifier><language>eng</language><publisher>New York: Springer US</publisher><subject>Analysis ; Business and Management ; Business competition ; Combinatorics ; Competition ; Debt financing ; Debt financing (Corporations) ; Demand (Economics) ; Financing ; Flexibility ; Mathematical optimization ; Operations research ; Operations Research/Decision Theory ; Original Research ; Theory of Computation</subject><ispartof>Annals of operations research, 2021-12, Vol.307 (1-2), p.53-74</ispartof><rights>The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2021</rights><rights>COPYRIGHT 2021 Springer</rights><rights>The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2021.</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c423t-1c014c06ce6d6fba357644a6221f5c9a4d424dd67221eed62048a0143bc6cf6a3</citedby><cites>FETCH-LOGICAL-c423t-1c014c06ce6d6fba357644a6221f5c9a4d424dd67221eed62048a0143bc6cf6a3</cites><orcidid>0000-0003-3003-5709</orcidid></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://link.springer.com/content/pdf/10.1007/s10479-021-04132-x$$EPDF$$P50$$Gspringer$$H</linktopdf><linktohtml>$$Uhttps://link.springer.com/10.1007/s10479-021-04132-x$$EHTML$$P50$$Gspringer$$H</linktohtml><link.rule.ids>314,777,781,27905,27906,41469,42538,51300</link.rule.ids></links><search><creatorcontrib>Cao, Guozhao</creatorcontrib><creatorcontrib>Wang, Zhan</creatorcontrib><title>Product flexibility of competitive manufactures: the effect of debt financing</title><title>Annals of operations research</title><addtitle>Ann Oper Res</addtitle><description>The goal of this paper was to examine the effect of debt financing on competitive manufactures’ product flexible capacity decisions. For this purpose, two competing firms were considered to invest in product flexible capacity and product dedicated capacity, respectively, each of them produced two products. Before investing in the capacity, each firm issues the optimal amount of debt. The product flexible capacity decision models of both levered firms and unlevered firms were built based on the competitive newsvendor model. Then the relationship between debt financing and product flexibility decision was discussed. The results indicated that under the competitive setting, the level of product flexibility decreased with debt as well as the difference of demand between the two products. Furthermore, the optimal capacity investment and debt of levered firms decreased with product flexibility. 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Wang, Zhan</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c423t-1c014c06ce6d6fba357644a6221f5c9a4d424dd67221eed62048a0143bc6cf6a3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2021</creationdate><topic>Analysis</topic><topic>Business and Management</topic><topic>Business competition</topic><topic>Combinatorics</topic><topic>Competition</topic><topic>Debt financing</topic><topic>Debt financing (Corporations)</topic><topic>Demand (Economics)</topic><topic>Financing</topic><topic>Flexibility</topic><topic>Mathematical optimization</topic><topic>Operations research</topic><topic>Operations Research/Decision Theory</topic><topic>Original Research</topic><topic>Theory of Computation</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Cao, Guozhao</creatorcontrib><creatorcontrib>Wang, Zhan</creatorcontrib><collection>CrossRef</collection><collection>Gale Business: Insights</collection><collection>ProQuest Central (Corporate)</collection><collection>Materials Business File</collection><collection>Mechanical & Transportation Engineering Abstracts</collection><collection>ABI/INFORM Collection</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni Edition)</collection><collection>Science Database (Alumni Edition)</collection><collection>Computing Database (Alumni Edition)</collection><collection>ProQuest Pharma Collection</collection><collection>Technology Research Database</collection><collection>ProQuest SciTech Collection</collection><collection>ProQuest Technology Collection</collection><collection>ProQuest Central (Alumni) (purchase pre-March 2016)</collection><collection>ABI/INFORM Collection (Alumni Edition)</collection><collection>Materials Science & Engineering Collection</collection><collection>ProQuest Central (Alumni Edition)</collection><collection>ProQuest Central UK/Ireland</collection><collection>Advanced Technologies & Aerospace Collection</collection><collection>ProQuest Central Essentials</collection><collection>ProQuest Central</collection><collection>Business Premium Collection</collection><collection>Technology Collection</collection><collection>ProQuest One Community College</collection><collection>ProQuest Central Korea</collection><collection>Engineering Research Database</collection><collection>Business Premium Collection (Alumni)</collection><collection>ABI/INFORM Global (Corporate)</collection><collection>ProQuest Central Student</collection><collection>SciTech Premium Collection</collection><collection>Materials Research Database</collection><collection>ProQuest Computer Science Collection</collection><collection>ProQuest Business Collection (Alumni Edition)</collection><collection>ProQuest Business Collection</collection><collection>Computer Science Database</collection><collection>Civil Engineering Abstracts</collection><collection>ABI/INFORM Professional Advanced</collection><collection>ProQuest Engineering Collection</collection><collection>ABI/INFORM Global</collection><collection>Computing Database</collection><collection>Science Database</collection><collection>Engineering Database</collection><collection>Advanced Technologies & Aerospace Database</collection><collection>ProQuest Advanced Technologies & Aerospace Collection</collection><collection>ProQuest One Business</collection><collection>ProQuest One Business (Alumni)</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>Engineering Collection</collection><collection>ProQuest Central Basic</collection><jtitle>Annals of operations research</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Cao, Guozhao</au><au>Wang, Zhan</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Product flexibility of competitive manufactures: the effect of debt financing</atitle><jtitle>Annals of operations research</jtitle><stitle>Ann Oper Res</stitle><date>2021-12-01</date><risdate>2021</risdate><volume>307</volume><issue>1-2</issue><spage>53</spage><epage>74</epage><pages>53-74</pages><issn>0254-5330</issn><eissn>1572-9338</eissn><abstract>The goal of this paper was to examine the effect of debt financing on competitive manufactures’ product flexible capacity decisions. For this purpose, two competing firms were considered to invest in product flexible capacity and product dedicated capacity, respectively, each of them produced two products. Before investing in the capacity, each firm issues the optimal amount of debt. The product flexible capacity decision models of both levered firms and unlevered firms were built based on the competitive newsvendor model. Then the relationship between debt financing and product flexibility decision was discussed. The results indicated that under the competitive setting, the level of product flexibility decreased with debt as well as the difference of demand between the two products. Furthermore, the optimal capacity investment and debt of levered firms decreased with product flexibility. 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| subjects | Analysis Business and Management Business competition Combinatorics Competition Debt financing Debt financing (Corporations) Demand (Economics) Financing Flexibility Mathematical optimization Operations research Operations Research/Decision Theory Original Research Theory of Computation |
| title | Product flexibility of competitive manufactures: the effect of debt financing |
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