Effects of information transparency and cooperation on supply chain performance: a simulation study

This research explores the effect of information transparency and cooperation among the front nodes of supply chains. Although published works in the supply chain (SC) domain underline the need for information transparency and cooperation for competitiveness of firms, the majority among these are conceptual or empirical. As such, the domain requires fresh effort towards analytical and simulation based research for validation. In the present work, simulation is used as the research methodology. The simulation platform is developed in ARENA®, which is based on simulation language SIMAN. It has the capability to model multi-product, multi-echelon supply chains. Cooperation is depicted in the form of demand pooling and accelerated delivery of consignments from cooperating SC nodes, when stock-out contingency occurs at a particular node. The modelling also explores the effects of full, partial and zero level of information transparency on the SC performance. The simulation results suggest that these initiatives improve SC service time performance. It is also observed that more advantages from cooperation and information transparency are obtainable when the SC is leaner. The studies also highlight that such SC initiative that motivates local optimisation at the nodes is counter-productive to SC wide performance.     

Demand information sharing and channel choice in a dual-channel supply chain with multiple retailers

In this paper, under a dual-channel supply chain consisting of a manufacturer and multiple retailers, we investigate vertical and horizontal information sharing in different channel structures and the manufacturer’s choice on whether or not to keep a direct channel. To this end, we first study the dual-channel structure where uncertain demand is a linear function of price with a generalised-distribution base demand and show that the retailers have incentives to share information horizontally but not vertically, while the manufacturer is better off with vertical information sharing but its expected profit is not affected by horizontal information sharing. We next examine the retail-channel structure and find the basic results remain unchanged. Finally, we provide closed-form internal and external conditions under which the manufacturer can benefit from owning a dual-channel structure. Our study extends the existing literature by combining information sharing and dual-channel choice, introducing channel difference, discussing the impact of channel structure on horizontal and vertical sharing as well as providing interesting managerial insights for channel choice.     

Optimal reservation pricing strategy for a fashion supply chain with forecast update and asymmetric cost information

We address the reservation pricing problem for a two-echelon fashion supply chain in which the downstream manufacturer with private information on its operations cost (low or high type) reserves the capacity for a critical component from the upstream supplier before placing the final order. We consider the case when the demand forecast is partially updated. We find that a novel menu of reservation contracts containing the unit reservation fee with reservation quantity and final order could induce the manufacturer to reveal its operations cost information truthfully. We also show that the supplier should require less capacity reservation and charge a lower unit reservation fee if it has asymmetric information about the manufacturer’s operations cost. Finally, we analyse the effects of forecast update, and our results indicate that: (i) the supplier benefits from forecast update because the optimal reservation pricing strategy is designed to reveal the true information and meanwhile induce a higher capacity reservation; and (ii) a greater amount of forecast update decreases the supply chain deficit and increases the supplier’s agency cost.     

Quantity discounts in single-period supply contracts with asymmetric demand information

We investigate how a supplier can use a quantity discount schedule to influence the stocking decisions of a downstream buyer that faces a single period of stochastic demand. In contrast to much of the work that has been done on single-period supply contracts, we assume that there are no interactions between the supplier and the buyer after demand information is revealed and that the buyer has better information about the distribution of demand than does the supplier. We characterize the structure of the optimal discount schedule for both all-unit and incremental discounts and show that the supplier can earn larger profits with an all-unit discount.     

Pricing and effort decisions for a supply chain with uncertain information

This paper analyses the pricing and effort decisions of a supply chain with single manufacturer and single retailer. The manufacturer produces a kind of product and then wholesales the product to the retailer, who in turn retails it to customers over a single selling season. The retailer can influence demand through her sales effort. This research depicts the consumer demand, the manufacturing cost and the sales effort cost as uncertain variables. Considering the demand expansion effectiveness of sales effort, one centralised and three decentralised game models are built on the basis of the expected value criterion, and the equilibrium solutions are obtained. We investigate the effects of the parameters’ uncertainty degrees on the pricing and effort decisions. The results indicate that the manufacturer benefits from improvement in demand and cost uncertainties when he has at least bargaining power in the supply chain. The results also imply that the uncertainty degree of sales effort elasticity has an outstanding influence on the pricing and effort decisions, whereas the uncertainty degree of price elasticity has a modest impact on these decisions. We also study the effects of the parameters’ uncertainty degrees on the supply chain from the consumers’ perspective. The results suggest that with a power retailer, the retail price should always be on the high end. Consequently, consumers do not necessarily benefit from a power retailer. When the manufacturer and the retailer have equal bargaining power, consumers do not necessarily benefit from the supply chain, either.     

Equilibrium markup pricing strategies for the dominant retailers under supply chain to chain competition

Markup pricing policies have been widely employed in the retailing industry. Under such policies, a retailer requires a retail margin over the wholesale price charged by the supplier to guarantee her profitability. This paper investigates and compares the performance of two commonly used markup pricing policies, namely, fixed-dollar markup and percentage markup, for the dominant retailers facing chain-to-chain competition. Our results demonstrate that the equilibrium pricing strategy for the dominant retailers seeking to maximise their respective profits is [PP]-strategy (i.e. both retailers select the percentage markup pricing policy), no matter what the demand curve and the level of chain-to-chain competition are. Unfortunately, this equilibrium will get in the prisoner’s dilemma since the percentage markup pricing strategy might yield lower profits for the retailers and suppliers compared to its fixed-dollar counterpart when the level of chain-to-chain competition is high enough under the linear demand, which is contrast to the literature. If the criteria for the dominant retailers to select which markup pricing policy to offer is the whole channel’s profit obtained under the decentralised decision-making scenario instead of themselves, [PP]-strategy is the dominant strategy and the unique Nash equilibrium of the pricing policy choice game regardless of the competitive intensity under the iso-elastic demand. This result holds true for the linear demand only when the level of chain-to-chain competition is below certain threshold; otherwise, both [FF] (i.e. both retailers select the fixed-dollar markup pricing policy) and [PP] can be the equilibrium pricing strategy.     

Agile supply chain strategy and supply chain performance: complementary roles of supply chain practices and information systems capability for agility

The paper examines the mediating effect of supply chain (SC) practices on the relationship between agile supply chain (ASC) strategy and SC performance. It further examines the moderating effect of information systems (IS) capability for agility on this mediated relationship. Using the theoretical lenses of complementarity and the information processing view of the supply chain, we hypothesise that strategic supplier partnership, customer relationship, postponement and lean practices, mediate the relationship between ASC strategy and SC performance. We further hypothesise that IS capability for agility moderates each of these mediated relationships. We empirically test the hypotheses using survey data from members of senior and executive management in the logistics/supply chain functions of 205 firms. The paper contributes to the literature on ASCs by theoretically explaining and empirically demonstrating how SC practices and IS capability for agility act together to effect a positive relationship between ASC strategy and supply chain performance.     

供应中断和需求扰动下供应链竞合关系研究

考虑供应中断和需求扰动情境下2个供应商和1个零售商组成的两级供应链系统,构建了合作、静态非合作、嵌套式静态非合作3个博弈模型,分析集中式、分散式供应商竞争与合作情形下的零售商采购策略与供应商定价策略。研究表明,当市场需求增大时,分散式供应商合作情形下供应链整体利润最高;当市场需求减少时,集中式供应链整体利润最高。当权衡供应商订货成本与产品供应稳定性时,零售商倾向与相对稳定的供应商合作;当供需同时不确定时,仅较稳定的供应商受影响。     

A horizontal capacity reservation game under asymmetric information

We investigate a common horizontal dual-sourcing model in the semiconductor industry. The supply chain consists of an integrated device manufacturer (IDM) and a pure-play foundry. The IDM can make internal production and source from the foundry, and only the IDM sells the products to the market. Both the IDM and the foundry must invest in production capacity before making production. We consider stochastic one-period demand, which can either be a high type or a low type. We assume that the true demand type is private information to the IDM such that the IDM and the foundry engage in a signalling game. We identify the unique separating equilibrium in this asymmetrical information setting. We find that information asymmetry may mitigate or aggravate the double marginalisation effect, and that it may also affect the capacity allocation between the IDM and the foundry. Furthermore, we conduct a numerical study to investigate the sensitivity of the equilibrium and the information rent.     

Cooperative advertising in a supply chain with retail competition

This research assesses the effects of cooperative (coop) advertising in a channel with competing retailers considering both advertising and pricing as decision variables. We develop a game-theoretic model and provide equilibrium solutions for two games. In Game 1, the manufacturer and the retailers do not use cooperative advertising (status quo); and in Game 2, coop advertising is implemented. We also obtain optimal solutions for the case where the channel is coordinated. Contrary to the results provided for one-manufacturer, one-retailer channels, we find that coop advertising may not be profitable for the retailers or for the channel, especially when the market is characterised by low levels of price competition and high advertising competition between retailers. Although it benefits the manufacturer, the total effect of cooperative advertising on the channel profit might be negative under such conditions. The results also show that coop advertising stimulates retailers’ spending but may result in lower advertising expenditures than for a fully coordinated channel. Finally, when coop advertising benefits the entire channel, it does not fully achieve results from vertical integration.     

Procurement decisions and information sharing under multi-tier disruption risk in a supply chain

We consider a manufacturer's procurement decision in a three-tier supply chain (SC) under disruption risk. The manufacturer sources components from a single first-tier supplier (FT). The FT, in turn, sources raw materials from a single second-tier supplier (ST). Suppliers in both tiers are unreliable, i.e. prone to disruption risk. Increasing SC visibility through information sharing is a potential disruption management strategy for the manufacturer. While the manufacturer can obtain disruption risk information for the FT, disruption risk information for the ST is not easily accessible to the manufacturer except through the FT, who may not be willing to share ST information. We study different mechanisms under which the manufacturer can obtain ST information, and its impact on manufacturer's and FT's decisions and potential profits. We show that information sharing makes the manufacturer's procurement decisions more conservative, i.e. carrying more inventories, but the FT's procurement decision is contingent on the ST's reliability; more proactive (conservative) when ST is unreliable (reliable), i.e. carrying less (more) inventories. We demonstrate that there are two ways to induce the FT to share its information, and numerically show that their effectiveness is contingent on multiple factors, including FT and ST reliabilities and information sharing costs.     

Supply chain coordination under information asymmetry: a review

Aligning supply chain decisions of separate entities with independent objectives can be considered to be one of the difficulties of supply chain management. This difficulty becomes worse if the supply chains are characterised by an asymmetrical distribution of information. Although considerable research has recently been devoted to supply chain coordination, less attention has been paid to different information asymmetry settings to the mechanisms underlying it. This research attempts to help fill this gap by reviewing and classifying the literature based on supply chain features, applied methodology, coordination mechanisms, and types of information asymmetry. The proposed classification is used to highlight the ongoing issues in the area and identify the direction for future research.     

Parallel importation and price competition in a duopoly supply chain

Nowadays, diversion of products distribution from authorised channels to the gray markets is one of the main challenges of manufacturers. Suppose an international supplier distributes the products in several countries with different prices. In parallel importation, there are unauthorised distributers who supply products with a lower price and import them to a higher price market. The problem of parallel importation considering a manufacturer and a competitor is analysed using the game theory approach in this article. We investigate the pricing strategy for manufacturers and the effect of unauthorised distributer on price, market share and profit. We also investigate the performance of different policies in a numerical study and show managerial insights.     

Trust-embedded coordination in supply chain information sharing

This paper studies supply chain coordination with trust-embedded cost-sharing contract. In a two-tier supply chain, a retailer (she) and a supplier (he) make their private demand forecasting individually. The retailer places soft-orders, which are costless, non-verifiable and cancellable before shipping, to the supplier. After that, the supplier relies on the retailer’s ordering information to update his demand evaluation and prepare his capacity. How much the supplier relies on the retailer’s ordering information is specified by trust, which is a kind of psychological feeling and affected by multiple factors. When the supplier does not fully trust the retailer, he tends to prepare a conservative capacity to avoid over-production. To coordinate the supply chain, a two-stage coordination process is proposed. At the first stage, the supplier and retailer negotiate a cost-sharing rule to bind soft-orders. At the second stage, the retailer places a soft-order and decides whether or not to bind it referring to the cost-sharing rule. After that, the supplier determines his optimal production capacity. We show that the retailer and supplier value trust differently in the experimental studies. We also find that there is a threshold of negotiation power for the supply chain partners which means the supplier’s/retailer’s expected profit drops down if his/her negotiation power exceeds certain thresholds. The experimental studies also show that the proposed the two-stage coordination is effective.     

Determination of the optimal degree of information sharing in a two-echelon supply chain

Information sharing is beneficial for supply chains, but often has marginally decreasing impacts on profit due to the costly expense of collecting more detailed information. This study aims to determine the optimal degree of information sharing with consideration of the trade-off between the cost of collecting information and the benefits gained by utilising it to enhance the profit of a two-echelon supply chain. Based on the analytical results, the profit that the supplier gains from information sharing can stem from the decrease in inventory cost after having more accurate information about demand. Furthermore, the impacts that the cost of collecting information has on the optimal degree of information sharing are investigated, and the results show that the optimal degree of information sharing is positively correlated to the correlation of successive market demand, that is, when the demand for successive periods is more correlated, information sharing becomes more valuable, and hence the optimal degree of information sharing increases.     

供应链订货与营销渠道协调的主从对策模型

研究了供应链订货与营销渠道的协调问题,考虑了零售商具有订货成本缩减和营销投资成本,建立了供应链订货与营销渠道协调的Stackelberg主从对策模型.这一模型中,主方零售商具有产品零售价格和投资决策权,从方供应商具有产品批发价格决策权.分析了零售商四种投资策略,针对每种投资策略下的协调模型进行了数值仿真,结果表明在零售商订货成本缩减和营销之间进行投资协调能够同时增加零售商和供应商利润.     

面向供应链合作的信任维系协调体系的研究

为了保证节点企业合作中信任协调的合作关系,以有效地实现企业经营目标,从信任的视角提出了一个包括目标层、合作层、信任协调层、支撑层在内的供应链合作(SCC)信任维系协调的解决思路.把节点企业内、外部的供应链运作、合作行为、业务目标集成起来,给出了整体框架模型,并对基于企业目标的信任协调机制、信任金字塔和实现协调层的具体方式等关键问题进行了探讨.信任协调体系框架模型对供应链合作运作提供了一定的参照.     

Collection channel and production decisions in a closed-loop supply chain with remanufacturing cost disruption

Enterprise risk management (ERM) focuses on managing functions of an entire business, with special attention to supply chain uncertainty. Managing supply chain through effective ERM will mitigate firm exposure to risk in operations and ensure the success of the business. We study collection channel and production decisions in a closed-loop supply chain (CLSC) with one dominant manufacturer and one retailer, from the perspective of both firm profit and system robustness. A robust system is desired as only minimal changes in production plan are necessary when facing disruption, and is valuable for enterprise risk reduction. We find that without disruption the indirect (retailer) collection channel achieves higher profit than that of the direct (manufacturer) channel, which is also true under some disruption cases. However, the direct channel is more robust when facing disruption, and generates more profits for manufacturers when the positive disruption is large. We also find that the revenue-sharing contracts are effective in coordinating members of the CLSC. Finally, we conduct numerical studies to validate the models and derive managerial insights.     

Pricing decisions for a supply chain with refurbished products

This paper considers a supply chain consisting of a supplier and a retailer where a fixed portion of new products sold will be returned to the retailer and then be repaired and resold as refurbished products at a lower price. Using the utility model, we formulate how consumers will make their choices when facing both new and refurbished products. Then, using the divide-and-conquer method, we derive the supplier and retailer's equilibrium decisions, including the supplier's wholesale price and the retailer's prices for both the new and refurbished products. The main findings include the following. First, refurbished products will be sold in the market only when the refurbishing cost is small. In this situation, as the refurbishing cost increases, most of the negative impact on the retailer will be transferred to the supplier. Second, in the same condition, as the refurbishing cost increases, the wholesale price and retail price of the new product will change in opposite directions. This result contrasts with the traditional pass-through effect. Third, when the repair cost is moderate, the retailer will eventually not sell refurbished products, but its profit can be significantly improved and the double marginalisation effect can be mitigated.     

非对称信息下考虑顾客抱怨的供应链质量控制研究

本文研究存在顾客抱怨的情形下,由一个制造商和一个零售商组成的供应链质量控制问题。构建了制造商和零售商的博弈模型,分析了非对称信息情况下当顾客抱怨和外部故障成本分担系数发生变化时,制造商和零售商的最优质量检测水平的变化,并得出非对称信息情况下制造商的最优质量检测水平随顾客抱怨的增加而线性增加的结论。