After-sale service deployment and information sharing in a supply chain under demand uncertainty

This paper investigates after-sale service deployment and information sharing strategies in a supply chain environment including the role of a manufacturer and an independent retailer. The manufacturer first needs to decide whether it is necessary to undertake the after-sale service by herself or delegate it to the retailer. Then, the retailer possessing better demand-forecast information decides whether to share their information with the manufacturer. When the manufacturer undertakes the after-sale service, we find that the retailer prefers to share the information with the manufacturer on the condition of highly cost efficiency for the manufacturer's after-sale service. However, we also find that information sharing does not always mean a win-win benefit for the whole supply chain partners. When the after-sale service is delegated to the retailer, our results show that only when the retailer's after-sale service cost efficiency and forecast variability are relatively low, the retailer prefers not to share information. Our analysis also indicates that the manufacturer may delegate the after-sale service to the retailer, even if the retailer does not have cost advantage. Compared with the situation where asymmetric information does not exist between the manufacturer and the retailer, the information advantage of the retailer may harm both parties and lead to a “prisoner's dilemma”. By examining the value of information forecast, we demonstrate that enhancing the forecast accuracy may be harmful to not only the manufacturer but also the retailer.