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Ordering and pricing decisions in a two-echelon supply chain with asymmetric demand information

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  • Hsieh, Chung-Chi
  • Wu, Cheng-Han
  • Huang, Ya-Jing

Abstract

This article examines coordinated decisions in a decentralized supply chain that consists of one supplier and one retailer, and faces random demand of a single product with a short life cycle. We consider a setting where the retailer has accurate demand information while the supplier does not. Such a problem with asymmetric demand information can be viewed as an extension of the newsboy problem in which both the supplier and the retailer possess the same demand information. Combining the mechanism of sharing demand information and that of quantity discount and return policy enables us to develop three coordinated models in contrast with the basic and uncoordinated model. We are able to show the ordinal relationship among the retailer's optimal order quantities in these four models under a general form of random demand, and compare the supply chain profits and conduct sensitivity analysis analytically in four models under uniform random demand. We also provide numerical results under normal random demand that bear a resemblance to those under uniform random demand.

Suggested Citation

  • Hsieh, Chung-Chi & Wu, Cheng-Han & Huang, Ya-Jing, 2008. "Ordering and pricing decisions in a two-echelon supply chain with asymmetric demand information," European Journal of Operational Research, Elsevier, vol. 190(2), pages 509-525, October.
    • Handle: RePEc:eee:ejores:v:190:y:2008:i:2:p:509-525
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    Cited by:

    1. Jing Zhao & Jie Wei & Xiaochen Sun, 2017. "Coordination of fuzzy closed-loop supply chain with price dependent demand under symmetric and asymmetric information conditions," Annals of Operations Research, Springer, vol. 257(1), pages 469-489, October.
    2. Messinger, Paul R., 2016. "The role of fairness in competitive supply chain relationships: An experimental studyAuthor-Name: Choi, Sungchul," European Journal of Operational Research, Elsevier, vol. 251(3), pages 798-813.
    3. Li, Yina & Xu, Xuejun & Zhao, Xiande & Yeung, Jeff Hoi Yan & Ye, Fei, 2012. "Supply chain coordination with controllable lead time and asymmetric information," European Journal of Operational Research, Elsevier, vol. 217(1), pages 108-119.
    4. Yan, Bo & Wang, Tao & Liu, Yan-ping & Liu, Yang, 2016. "Decision analysis of retailer-dominated dual-channel supply chain considering cost misreporting," International Journal of Production Economics, Elsevier, vol. 178(C), pages 34-41.
    5. Zhang, Baofeng & Wu, Desheng Dash & Liang, Liang, 2018. "Trade credit model with customer balking and asymmetric market information," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 110(C), pages 31-46.
    6. Lau, Amy Hing Ling & Lau, Hon-Shiang & Wang, Jian-Cai, 2010. "Usefulness of resale price maintenance under different levels of sales-effort cost and system-parameter uncertainties," European Journal of Operational Research, Elsevier, vol. 203(2), pages 513-525, June.
    7. Ata Allah Taleizadeh & Mahsa Noori-daryan & Kannan Govindan, 2016. "Pricing and ordering decisions of two competing supply chains with different composite policies: a Stackelberg game-theoretic approach," International Journal of Production Research, Taylor & Francis Journals, vol. 54(9), pages 2807-2836, May.

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