Information sharing in a supply chain with a common retailer
supply chain management; common retailer; incentive; information sharing; nonlinear production cost; manufacturer competition
We consider the problem of sharing retailer's demand information in a supply chain with two competing manufacturers selling substitutable products through a common retailer. We examine several scenarios with either the retailer or the manufacturers as leaders in offering information (sharing) contracts. We show that a larger production diseconomy or higher competition intensity induces more information sharing. The retailer may benefit from a larger production diseconomy, which is not possible without information contracting. Information contracting always benefits the retailer, and the benefit is larger when she offers contracts sequentially rather than simultaneously to the manufacturers. Information contracting benefits the manufacturers only when they offer the contracts and production diseconomy is large. When either demand uncertainty or production diseconomy is large, the retailer invests more in improving information accuracy. When competition is more intense, she invests more except under some conditions that we fully characterize.
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Shang, W., Ha, A. Y., & Tong, S. (2015). Information sharing in a supply chain with a common retailer. Management Science, 62(1), 245-263. doi: 10.1287/mnsc.2014.2127