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Optimal decisions for a dual-channel supply chain under information asymmetry

  • * Corresponding author: Erbao Cao

    * Corresponding author: Erbao Cao 
The authors are supported by the National Natural Science Foundation of China under Grants 71420107027,71671061,71331001 and 91547113, the Program for New Century Excellent Talents in University under Grants NCET-13-0181, the Science and Technology Projects of Hunan Province under Grants 2016WK2015 and 2017CT5015.
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  • We discuss the optimal pricing and production decisions in a channel supply chain under symmetric and asymmetric information cases. We compare the optimum policies between the asymmetric information and the full information cases. We analyze the effect of the reseller's cost information on the profits of the partners. We find that information asymmetry is beneficial to the reseller, but is inefficient to the manufacturer and the whole supply chain. The information value increases with uncertainties arising from the reseller's cost structure. The dual-channel supply chain can share information and achieve coordination, if the lump-sum side payment from the manufacturer can make up the loss of the reseller due to sharing information. Finally, the effectiveness of the proposed models is verified by numerical examples.

    Mathematics Subject Classification: Primary: 58F15, 58F17; Secondary: 53C35.

    Citation:

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  • Figure 1.  Variation of prices with $\theta$ under asymmetric information case

    Figure 2.  Variation of demands with $\theta$ under asymmetric information case

    Figure 3.  Variation of the manufacturer's profit for various $B$ under asymmetric information case

    Table 1.  The optimum policies under full and asymmetric information cases

    $p_1$ $p_2$ $w$ $L_1$ $D_2$ D $\pi_m$ $\pi_r$ $\pi$
    Full Information 630 510 185.9 192.793 326.126 518.919 244226 6188 250414
    Asymmetric Information 592.771 510 141.225 326.952 212.091 539.043 230462 17799 248261
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