IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v329y2023i1d10.1007_s10479-021-04021-3.html
   My bibliography  Save this article

Vertical value-added cost information sharing in a supply chain

Author

Listed:
  • Mengqi Liu

    (Hunan University)

  • Yueli Zhao

    (Hunan University)

  • Rui Huang

    (Hunan University)

  • Sandun Perera

    (The University of Nevada)

Abstract

We study a two-echelon supply chain with two homogeneous manufacturers and one common retailer who has full knowledge about his own value-added service cost structure that is unknown to the manufacturers. The retailer may choose to disclose his cost information to the manufacturers. Using a three-stage game-theoretic model, we derive optimal pricing strategies for each participant, and optimal information sharing strategies, and the optimal level of the value-added services for the retailer. Our study also reveals when the manufacturers should accept the disclosed information by the retailer. It is shown that information sharing does not always create a win–win situation among the partners in the supply chain. When the value-added service cost efficiency is low, the retailer is willing to share complete information with the manufacturers; however, information sharing harms the manufacturers’ profits if they accept the shared information. In contrast, when the value-added service cost efficiency is high, the common retailer has no incentive to share information with the manufacturers and the unique equilibrium is no information sharing. Finally, we utilize a revenue-sharing contract to achieve supply chain coordination and induce information sharing under asymmetric information.

Suggested Citation

  • Mengqi Liu & Yueli Zhao & Rui Huang & Sandun Perera, 2023. "Vertical value-added cost information sharing in a supply chain," Annals of Operations Research, Springer, vol. 329(1), pages 781-814, October.
  • Handle: RePEc:spr:annopr:v:329:y:2023:i:1:d:10.1007_s10479-021-04021-3
    DOI: 10.1007/s10479-021-04021-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-021-04021-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s10479-021-04021-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lode Li & Hongtao Zhang, 2008. "Confidentiality and Information Sharing in Supply Chain Coordination," Management Science, INFORMS, vol. 54(8), pages 1467-1481, August.
    2. 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.
    3. Li, Guo & Li, Lin & Sethi, Suresh P. & Guan, Xu, 2019. "Return strategy and pricing in a dual-channel supply chain," International Journal of Production Economics, Elsevier, vol. 215(C), pages 153-164.
    4. Zhang, Juliang & Chen, Jian, 2013. "Coordination of information sharing in a supply chain," International Journal of Production Economics, Elsevier, vol. 143(1), pages 178-187.
    5. S. Chan Choi, 1991. "Price Competition in a Channel Structure with a Common Retailer," Marketing Science, INFORMS, vol. 10(4), pages 271-296.
    6. Zhang, Shuguang & Dan, Bin & Zhou, Maosen, 2019. "After-sale service deployment and information sharing in a supply chain under demand uncertainty," European Journal of Operational Research, Elsevier, vol. 279(2), pages 351-363.
    7. Ma, Peng & Shang, Jennifer & Wang, Haiyan, 2017. "Enhancing corporate social responsibility: Contract design under information asymmetry," Omega, Elsevier, vol. 67(C), pages 19-30.
    8. Joseph C. Hartman & Kamonkan Laksana, 2009. "Designing and pricing menus of extended warranty contracts," Naval Research Logistics (NRL), John Wiley & Sons, vol. 56(3), pages 199-214, April.
    9. Lode Li, 2002. "Information Sharing in a Supply Chain with Horizontal Competition," Management Science, INFORMS, vol. 48(9), pages 1196-1212, September.
    10. Xia Zhao & Ling Xue & Fuqiang Zhang, 2014. "Outsourcing Competition and Information Sharing with Asymmetrically Informed Suppliers," Production and Operations Management, Production and Operations Management Society, vol. 23(10), pages 1706-1718, October.
    11. Guanghua Han & Ming Dong, 2015. "Trust-embedded coordination in supply chain information sharing," International Journal of Production Research, Taylor & Francis Journals, vol. 53(18), pages 5624-5639, September.
    12. Mohammadali Vosooghidizaji & Atour Taghipour & Béatrice Canel-Depitre, 2020. "Supply chain coordination under information asymmetry: a review," International Journal of Production Research, Taylor & Francis Journals, vol. 58(6), pages 1805-1834, March.
    13. Yao, Dong-Qing & Yue, Xiaohang & Liu, John, 2008. "Vertical cost information sharing in a supply chain with value-adding retailers," Omega, Elsevier, vol. 36(5), pages 838-851, October.
    14. Wenming Xie & Yingxue Zhao & Zhibin Jiang & Pui-Sze Chow, 2016. "Optimizing product service system by franchise fee contracts under information asymmetry," Annals of Operations Research, Springer, vol. 240(2), pages 709-729, May.
    15. Lu, Jye-Chyi & Tsao, Yu-Chung & Charoensiriwath, Chayakrit, 2011. "Competition under manufacturer service and retail price," Economic Modelling, Elsevier, vol. 28(3), pages 1256-1264, May.
    16. Li, Xiaojing & Chen, Jing & Ai, Xingzheng, 2019. "Contract design in a cross-sales supply chain with demand information asymmetry," European Journal of Operational Research, Elsevier, vol. 275(3), pages 939-956.
    17. Li, Gang & Huang, Feng Feng & Cheng, T.C.E. & Zheng, Quan & Ji, Ping, 2014. "Make-or-buy service capacity decision in a supply chain providing after-sales service," European Journal of Operational Research, Elsevier, vol. 239(2), pages 377-388.
    18. Xumei Zhang & Xiaopeng Han & Xiangyu Liu & Ru Liu & Jinzhong Leng, 2015. "The pricing of product and value-added service under information asymmetry: a product life cycle perspective," International Journal of Production Research, Taylor & Francis Journals, vol. 53(1), pages 25-40, January.
    19. Wei Xing & Qing Zhu & Xuan Zhao, 2019. "Supply contract design under price volatility and competition," International Journal of Production Research, Taylor & Francis Journals, vol. 57(24), pages 7536-7551, December.
    20. Weihua Liu & Shuqing Wang & DongLei Zhu & Di Wang & Xinran Shen, 2018. "Order allocation of logistics service supply chain with fairness concern and demand updating: model analysis and empirical examination," Annals of Operations Research, Springer, vol. 268(1), pages 177-213, September.
    21. 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.
    22. Armony, Mor & Haviv, Moshe, 2003. "Price and delay competition between two service providers," European Journal of Operational Research, Elsevier, vol. 147(1), pages 32-50, May.
    23. Kurata, Hisashi & Yue, Xiaohang, 2008. "Trade promotion mode choice and information sharing in fashion retail supply chains," International Journal of Production Economics, Elsevier, vol. 114(2), pages 507-519, August.
    24. Bin Dan & Shuguang Zhang & Maosen Zhou, 2018. "Strategies for warranty service in a dual-channel supply chain with value-added service competition," International Journal of Production Research, Taylor & Francis Journals, vol. 56(17), pages 5677-5699, September.
    25. Wei Hu & Yongjian Li & Wen Wang, 2017. "Benefit and risk analysis of consignment contracts," Annals of Operations Research, Springer, vol. 257(1), pages 641-659, October.
    26. Kurata, Hisashi & Nam, Seong-Hyun, 2010. "After-sales service competition in a supply chain: Optimization of customer satisfaction level or profit or both?," International Journal of Production Economics, Elsevier, vol. 127(1), pages 136-146, September.
    27. Lau, Amy Hing Ling & Lau, Hon-Shiang & Wang, Jian-Cai, 2007. "Pricing and volume discounting for a dominant retailer with uncertain manufacturing cost information," European Journal of Operational Research, Elsevier, vol. 183(2), pages 848-870, December.
    28. Bin Shen & Tsan-Ming Choi & Stefan Minner, 2019. "A review on supply chain contracting with information considerations: information updating and information asymmetry," International Journal of Production Research, Taylor & Francis Journals, vol. 57(15-16), pages 4898-4936, August.
    29. Zhou, Maosen & Dan, Bin & Ma, Songxuan & Zhang, Xumei, 2017. "Supply chain coordination with information sharing: The informational advantage of GPOs," European Journal of Operational Research, Elsevier, vol. 256(3), pages 785-802.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guan, Zili & Zhang, Xumei & Zhou, Maosen & Dan, Yiran, 2020. "Demand information sharing in competing supply chains with manufacturer-provided service," International Journal of Production Economics, Elsevier, vol. 220(C).
    2. Zhang, Shuguang & Dan, Bin & Zhou, Maosen, 2019. "After-sale service deployment and information sharing in a supply chain under demand uncertainty," European Journal of Operational Research, Elsevier, vol. 279(2), pages 351-363.
    3. Xue Chen & Bo Li & Weichun Chen & Shuang Wu, 2023. "Influences of information sharing and online recommendations in a supply chain: reselling versus agency selling," Annals of Operations Research, Springer, vol. 329(1), pages 717-756, October.
    4. Lou, Yaqi & Feng, Lipan & He, Shuguang & He, Zhen & Zhao, Xiukun, 2020. "Logistics service outsourcing choices in a retailer-led supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    5. Xing, Wei & Li, Qiankun & Zhao, Xuan & Li, Jialu, 2020. "Information sale and contract selection under downstream competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 136(C).
    6. Huang, Yanting & Wang, Zongjun, 2017. "Values of information sharing: A comparison of supplier-remanufacturing and manufacturer-remanufacturing scenarios," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 106(C), pages 20-44.
    7. Weixin Shang & Albert Y. Ha & Shilu Tong, 2016. "Information Sharing in a Supply Chain with a Common Retailer," Management Science, INFORMS, vol. 62(1), pages 245-263, January.
    8. Zhang, Chu & Liu, Bin & Cai, Gangshu George & Huang, Tao, 2023. "When ignorance is bliss: The retailer’s intelligence hazard under information sharing and exchanging," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 180(C).
    9. Tianjian Yang & Chunmei Li & Xiongping Yue & Beibei Zhang, 2022. "Decisions for Blockchain Adoption and Information Sharing in a Low Carbon Supply Chain," Mathematics, MDPI, vol. 10(13), pages 1-23, June.
    10. Yucai Wu & Jiguang Wang & Lu Chen, 2021. "Optimization and Decision of Supply Chain Considering Negative Spillover Effect and Service Competition," Sustainability, MDPI, vol. 13(4), pages 1-20, February.
    11. Wu, Junjian & Wang, Haiyan & Shang, Jennifer, 2019. "Multi-sourcing and information sharing under competition and supply uncertainty," European Journal of Operational Research, Elsevier, vol. 278(2), pages 658-671.
    12. Yu, Yugang & Zhou, Sijie & Shi, Ye, 2020. "Information sharing or not across the supply chain: The role of carbon emission reduction," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
    13. Chen, Lei & Huang, Qiuyu & Xu, Jingwen, 2024. "On the “prisoner’s dilemma” of order timing in a cross-border and co-opetitive supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 185(C).
    14. Shi, Chun-lai & Geng, Wei, 2021. "To introduce a store brand or not: Roles of market information in supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 150(C).
    15. Liu, Molin & Dan, Bin & Zhang, Shuguang & Ma, Songxuan, 2021. "Information sharing in an E-tailing supply chain for fresh produce with freshness-keeping effort and value-added service," European Journal of Operational Research, Elsevier, vol. 290(2), pages 572-584.
    16. Keyuan Cai & Zhen He & Yaqi Lou & Shuguang He, 2020. "Risk-aversion information in a supply chain with price and warranty competition," Annals of Operations Research, Springer, vol. 287(1), pages 61-107, April.
    17. Li, Mengfan & Hong, Zhaofu & Guo, Xiaolong & Yu, Yugang, 2025. "Green design and information sharing in a horizontally competitive supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 194(C).
    18. Junjian Wu & Henry Xu, 2021. "Information Leakage and Financing Decisions in a Supply Chain with Corporate Social Responsibility and Supply Uncertainty," Sustainability, MDPI, vol. 13(21), pages 1-22, October.
    19. Niu, Baozhuang & Xu, Haotao & Dai, Zhipeng, 2022. "Check Only Once? Health Information Exchange between Competing Private Hospitals," Omega, Elsevier, vol. 107(C).
    20. Matsui, Kenji, 2019. "A supply chain member should set its margin later if another member's cost is highly uncertain," European Journal of Operational Research, Elsevier, vol. 275(1), pages 127-138.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:329:y:2023:i:1:d:10.1007_s10479-021-04021-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.