Management, Supply chain Co-ordination, asymmetric information, seminal paper, swot analysis, market demand asymmetry, production costs asymmetry
The coordination supply chain concerns two independent partners: a supplier and a retailer. The supplier offers the retailer a single product that can be sold to an eventual consumer. These supply chain contracts can be classified as demand-dependent pricing schemes - revenue sharing, buy-backs, quantity flexibility contracts and sales rebate contracts - or quantity-dependent pricing schemes - two-part tariffs and quantity discount. We know that each partner wants to make profit and obtain potential benefit. If the benefit of coordination and cooperation rises for both partners, the partnership will continue and the profit will increase but if one of the vendors obtains lower profit the coalition will suddenly stop. So the members of the coordination system are partners and they expect to coordinate their activities and their sales until the maximization of their respective profit.
[...] Hence the retailer will choose the order quantity with a price of . The retailer wants to maximize his profit . There is an optimal contract under which the retailer will reveal truthfully which means that . Optimal contracts under full information Retailer's problems We will now compute the retailer's contract under full information in cases F1 and F2. The problem is the following one. In case F1, L is equal to 0 and in case F2, L is independent of q. [...]
[...] It results in lost sales Salvage value paid by the supplier to the retailer for unsold goods Unsold inventory Probability that the supplier is from low type Probability that the supplier is from high type REFERENCES Auronen, L Asymmetric information: Theory and applications. Seminar in strategy and international business http://riem.swufe.edu.cn/new/techupload/course/20071191742254245.pdf http://en.wikipedia.org/wiki/Information_economics http://en.wikipedia.org/wiki/Information_asymmetry http://www.yourdictionary.com/business/buy-back-agreement Auronen, L Asymmetric information: Theory and applications. Seminar in strategy and international business. A markup is the difference between the lowest current offering price among dealers and the higher price that a dealer charges to the customer. [...]
[...] In most papers and readings, it is considered that all firms have full information when making their decisions. But in practice full information is rare and not realistic. The main goal of this paper is to make a survey about asymmetric information between different agents of a contract. The value of this survey is to identify what is already done and what can be done in future researches about the subject. Hence to give an idea of the organization of this survey, we will first clarify the concept of asymmetric information. [...]
[...] Let the supplier's unit production cost. We assume that has two states: a low one ( ) and a high one ( When the order is placed, the supplier observes his capability to drive his unit production cost down. If he has a high (low) capacity, his unit production costs are low ( ) (high ( We assume that if his expected unit production cost is lower than , we say that the supplier is one of low type. If it's higher than then he's from high type. [...]
[...] If the retailer knows the supplier's costs with probability , his profit is maximized under the contract where and . In this case the retailer receives exactly his reservation profit. But because quantity is the optimal for the supply chain, also coordinates the supply chain. The asymmetric information scenario In this section, when the retailer places an order, the supplier knows if he is from low or from high type but the retailer doesn't know. He just knows that with probability that the supplier is from low type and with probability that he is from high type. [...]
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