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Supply chain coordination under asymmetric production cost information and inventory inaccuracy

Author

Listed:
  • Lei, Quansheng
  • Chen, Jian
  • Wei, Xingyu
  • Lu, Shan

Abstract

In this paper, considering a supply chain subject to stochastic demand, we present a newsvendor model to study the game process between a supplier owning private cost information and a retailer suffering from inventory inaccuracy problem. We present that by setting the contract parameters appropriately, both partners have the right incentive for maximizing the total supply chain profit: the supplier share information actively by choosing the contract designed for his marginal production cost, while the retailer׳s rational decision concurs with the overall optimal decision. We further study the supply chain performance and the interval of the coordinating contract parameters under different situations by illustrating the model through some numerical assumptions, establishing and highlighting the conditions under which the RFID technology is preferable to the system.

Suggested Citation

  • Lei, Quansheng & Chen, Jian & Wei, Xingyu & Lu, Shan, 2015. "Supply chain coordination under asymmetric production cost information and inventory inaccuracy," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 204-218.
    • Handle: RePEc:eee:proeco:v:170:y:2015:i:pa:p:204-218
    DOI: 10.1016/j.ijpe.2015.09.015
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    2. Sahani Rathnasiri & Pritee Ray & Carlos A. Vega-Mejía & Sardar M. N. Islam & Nripendra P. Rana & Yogesh K. Dwivedi, 2022. "Optimising small-scale electronic commerce supply chain operations: a dynamic cost-sharing contract approach," Annals of Operations Research, Springer, vol. 318(1), pages 453-499, November.
    3. Yang, Rui & Tang, Wansheng & Dou, Mengdi & Zhang, Jianxiong, 2021. "Pricing and investing in co-creation with customers for a duopoly," International Journal of Production Economics, Elsevier, vol. 237(C).
    4. Huang, Song & Yang, Jun, 2016. "Information acquisition and transparency in a supply chain with asymmetric production cost information," International Journal of Production Economics, Elsevier, vol. 182(C), pages 449-464.
    5. Huang, Song & Wang, Yun & Zhang, Xianmei, 2023. "Contracting with countervailing incentives under asymmetric cost information in a dual-channel supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 171(C).
    6. 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.
    7. Zhou, Jianheng & Zhao, Ruijuan & Wang, Weishen, 2019. "Pricing decision of a manufacturer in a dual-channel supply chain with asymmetric information," European Journal of Operational Research, Elsevier, vol. 278(3), pages 809-820.
    8. Shengliang Zong & Chunyang Shen & Siping Su, 2022. "Decision Making in Green Supply Chain with Manufacturers’ Misreporting Behavior," Sustainability, MDPI, vol. 14(9), pages 1-28, April.
    9. Yang, Huixiao & Chen, Wenbo, 2020. "Game modes and investment cost locations in radio-frequency identification (RFID) adoption," European Journal of Operational Research, Elsevier, vol. 286(3), pages 883-896.
    10. Tatyana Chernonog, 2021. "Strategic information sharing in online retailing under a consignment contract with revenue sharing," Annals of Operations Research, Springer, vol. 300(2), pages 621-641, May.
    11. Lv, Fei & Xiao, Lei & Xu, Minghui & Guan, Xu, 2019. "Quantity-payment versus two-part tariff contracts in an assembly system with asymmetric cost information," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 129(C), pages 60-80.
    12. Li, Xin & Lian, Zhaotong & Pang, Chuan, 2020. "Efficient coordination of supply contracts with demand learning and two production modes," International Journal of Production Economics, Elsevier, vol. 225(C).
    13. Lei Yang & Jingna Ji & Chenshi Zheng, 2016. "Impact of Asymmetric Carbon Information on Supply Chain Decisions under Low-Carbon Policies," Discrete Dynamics in Nature and Society, Hindawi, vol. 2016, pages 1-16, February.

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