Sharing Demand Information in Competing Supply Chains with Production Diseconomies

Ha, Albert Y.; Tong, Shilu; Zhang, Hongtao

doi:10.1287/mnsc.1100.1295

Cited by 378 publications

(208 citation statements)

References 27 publications

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“…They explore menu contracts and linear price contracts between the manufacturer and the retailer in each supply chain, finding that the value of vertical information sharing is positive for the menu contracts and negative for the linear contracts. Considering two competing supply chains under production diseconomies, Ha et al (2011) identify the conditions under which vertical information sharing benefits a supply chain. We suggest a mechanism that effectively yields demand information revelation as equilibrium behavior with endogenous demand forecasting.…”

Section: Literature Reviewmentioning

confidence: 99%

Do Firms Invest in Forecasting Efficiently? The Effect of Competition on Demand Forecast Investments and Supply Chain Coordination

Shin

Tunca

2010

Operations Research

159

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We study the effect of downstream competition on incentives for demand forecast investments in supply chains. We show that with common pricing schemes, such as wholesale price or two-part tariffs, downstream firms under Cournot competition overinvest in demand forecasting. Analyzing the determinants of overinvestment, we demonstrate that under wholesale price contracts and two-part tariffs, total demand forecast investment can be very significant, and as a result, the supply chain can suffer substantial losses. We show that an increased number of competing retailers and uncertainty in consumer demand tend to increase inefficiency, whereas increased consumer market size and demand forecast costs reduce the loss in supply chain surplus. We identify the causes of inefficiency, and to coordinate the channel with forecast investments, we explore contracts in the general class of market-based contracts used in practice. When retailers' forecast investments are not observable, such a contract that employs an index-price can fully coordinate the supply chain. When forecast investments are observable to others, however, the retailers engage in an "arms race" for forecast investment, which can result in a significant increase in overinvestment and reduction in supply chain surplus. Furthermore, in that case, simple market-based contracts cannot coordinate the supply chain. To solve this problem, we propose a uniform-price divisiblegood auction-based contracting scheme, which can achieve full coordination when forecast investments are observable. We also demonstrate the desirable properties for implementability of our proposed coordinating contracting schemes, including incentive-compatible and reliable demand forecast information revelation by the retailers, and being regret-free.

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Section: Literature Reviewmentioning

confidence: 99%

Do Firms Invest in Forecasting Efficiently? The Effect of Competition on Demand Forecast Investments and Supply Chain Coordination

Shin

Tunca

2010

Operations Research

159

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“…In this aspect, there is a large body of literature on direct information sharing, in the sense that a member who has some private information directly reports to other members via some information systems, such as the electronic data interchange systems. This literature characterizes the value of information sharing, and explores the conditions of information sharing in a yes-or-no manner [37][38][39][40][41]. Recently, scholars have started to study indirect information sharing, where private information cannot be directly exchanged or conveyed by some other strategic instruments.…”

Section: Literature Reviewmentioning

confidence: 99%

Signaling Product Quality Information in Supply Chains via Corporate Social Responsibility Choices

Xiao

et al. 2017

Sustainability

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This study focuses on how an upstream supplier signals the private information of its product quality with corporate social responsibility (CSR) choices to a downstream retailer and uninformed consumers in the final market. We build a signaling model to: capture the strategic interactions among the supplier, the retailer, and the final consumers in the supply chain; characterize completely the set of all separating perfect Bayesian equilibriums (PBEs); and finally, select a unique equilibrium that satisfies the intuitive criterion for exploring some comparative statics. The equilibrium results show that under some technical conditions: (1) a set of moderate levels of CSR conduct signal the upstream supplier's high quality in the sense of separating PBEs; (2) the unique separating PBE satisfying the intuitive criterion is the one with the lowest CSR level that separates a high-quality supplier from a low-quality supplier; (3) the lowest CSR level decreases in the proportion of informed consumers and the low-quality supplier's marginal CSR cost, but is independent of the high-quality supplier's marginal CSR cost; (4) the profits of the high-quality supplier increase in proportion to the number of informed consumers and the low-quality supplier's marginal cost CSR, but decrease in proportion to the high-quality supplier's marginal CSR cost. Managerial insights are also discussed.

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“…Li and Zhang [2] examined how the level of confidentiality influences firms' VIS decisions. Ha et al [24,25] studied VIS in two competing SCs. Wu et al [26] examined the relationship between channel construction and VIS.…”

Section: Related Workmentioning

confidence: 99%

Vertical Cost-Information Sharing in a Food Supply Chain with Multiple Unreliable Suppliers and Two Manufacturers

Wang

2017

Journal of Food Quality

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This paper considers a food supply chain where multiple suppliers provide completely substitutable food products to two manufacturers. Meanwhile, the suppliers face yield uncertainty and the manufacturers face uncertain production costs that are private information. While the suppliers compete on price, the manufacturers compete on quantity. We build a stylized multistage game theoretic model to analyze the issue of vertical cost-information sharing (VCIS) within the supply chain by considering key parameters, including the level of yield uncertainty, two manufacturers' cost correlation, the correlated coefficient of suppliers' yield processes, and the number of suppliers. We study the suppliers' optimal wholesale price and the manufacturers' optimal order quantities under different VCIS strategies. Finally, through numerical analyses, we examine how key parameters affect the value of VCIS to each supplier and each manufacturer, respectively. We found that the manufacturers are willing to share cost information with suppliers only when the two manufacturers' cost correlation is less than a threshold. While a high correlated coefficient of suppliers' yield processes and a large number of suppliers promote complete information sharing, a high level of yield uncertainty hinders complete information sharing. All these findings have important implications to industry practices.

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Sharing Demand Information in Competing Supply Chains with Production Diseconomies

Cited by 378 publications

References 27 publications

Do Firms Invest in Forecasting Efficiently? The Effect of Competition on Demand Forecast Investments and Supply Chain Coordination

Do Firms Invest in Forecasting Efficiently? The Effect of Competition on Demand Forecast Investments and Supply Chain Coordination

Signaling Product Quality Information in Supply Chains via Corporate Social Responsibility Choices

Vertical Cost-Information Sharing in a Food Supply Chain with Multiple Unreliable Suppliers and Two Manufacturers

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