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Vertical value-added cost information sharing in a supply chain
Mengqi Liu1, Yueli Zhao1, Rui Huang1
1Business School, Hunan University, Changsha, 410082 Hunan China.
Annals of Operations Research
|March 15, 2021
Summary
Information sharing in supply chains is complex. Sharing retailer cost data can harm manufacturers unless value-added service efficiency is low, requiring revenue-sharing contracts for coordination.
Area of Science:
- Operations Research
- Supply Chain Management
- Game Theory
Background:
- Examines a two-echelon supply chain with two manufacturers and one common retailer.
- Highlights asymmetric information regarding the retailer's value-added service cost structure.
Purpose of the Study:
- To model optimal pricing, information sharing, and service levels in a supply chain with asymmetric cost information.
- To determine conditions under which information sharing benefits supply chain partners.
Main Methods:
- Employs a three-stage game-theoretic model to analyze strategic interactions.
- Derives optimal strategies for pricing, information disclosure, and value-added services.
Main Results:
- Information sharing does not universally lead to win-win outcomes.
- Low value-added service cost efficiency incentivizes retailer information sharing, potentially harming manufacturers.
- High efficiency leads to no information sharing equilibrium.
Conclusions:
- Supply chain coordination and information sharing can be achieved using revenue-sharing contracts, especially under asymmetric information.
- The effectiveness of information sharing is contingent on the retailer's value-added service cost efficiency.
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