In the supply-chain literature, an increasing body of work studies how suppliers can use incentive schemes such as quantity discounts to influence buyers' ordering behaviour, thus reducing the supplier's (and the total supply chain's) costs. Various functional forms for such incentive schemes have been proposed, but a critical assumption always made is that the supplier has full information about the buyer's cost structure. We derive the optimal quantity discount policy under asymmetric information and compare it to the situation where the supplier has full information.supply contracts, coordination, lot sizing, quantity discounts, asymmetric information
Various models have been developed over the years to analyze the many facets of the flexibility of production and operations systems. This paper proposes a general framework for the modeling and analysis of flexibility. The argument hinges upon the distinction between flexibility---a property of the technology---and diversity---a property of the environment in which the technology is operated. Flexibility is characterized as a hedge against diversity. Intuitive strategic properties that are conventionally attributed to flexibility are shown to follow directly from this framework. As illustrated by the different examples that are discussed, many existing models can be naturally interpreted in this context. As an application, the effect of load imbalance on a set of parallel machines is analyzed. The problem sheds light on the role of flexibility in queuing network and lot-sizing models of production.flexibility, operations strategy, lattice programming, queuing, lot-sizing
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