Abstract
A contracting game under asymmetric information specific to two-echelon supply chain coordination between a retailer of unknown type and a supplier is studied. When the parameter which is private information to the retailer (holding cost) is known up to an interval of uncertainty, a uniform discrete approximation for retailer types leads to closed-form solutions where the joint (coordinated) optimal order quantity for a modified holding cost plays a major role. Furthermore, the closed-form solutions result in increasing information rent for higher types under easy-to-verify conditions involving strict lower limits on the total holding costs of retailer and supplier and the difference between uncoordinated optimal costs of consecutive retailer types.
This is a preview of subscription content, log in via an institution to check access.
Notes
Recall that with linear constraints the Slater condition is not needed, c.f. [9].
References
Corbett, C.J., de Groote, X.: A supplier’s optimal quantity discount policy under asymmetric information. Manag. Sci. 46, 444–450 (2000)
Corbett, C.J., Zhou, D., Tang, C.S.: Designing supply contracts: contract type and information asymmetry. Manag. Sci. 50, 550–559 (2004)
Çakanyıldırım, M., Feng, Q., Gan, X., Sethi, S.P.: Contracting and coordination under asymmetric production cost information. Prod. Oper. Manag. 21, 345–360 (2012)
Pischulov, G., Richter, K.: Optimal contract design in the joint economic lot size problem with multidimensional asymmetric information. Eur. J. Oper. Res. 253, 711–733 (2016)
Voigt, G., Inderfurth, K.: Supply chain coordination and setup cost reduction in case of asymmetric information. OR Spectr. 33, 99–122 (2011)
Zissis, D., Ioannou, D., Burnetas, A.: Supply chain coordination under discrete information asymmetries and quantity discounts. Omega 53, 21–29 (2015)
Laffont, J.-J., Martimort, D.: The Theory of Incentives: The Principal Agent Model. Princeton University Press, Princeton (2002)
Kerkkamp, R.B.O., van den Heuvel, W., Wagelmans, A.P.M.: Two-echelon supply chain coordination under information asymmetry with multiple types. Omega (2016). https://doi.org/10.1016/j.omega.2017.04.005
Boyd, S., Vandenberghe, L.: Convex Optimization. Cambridge University Press, Cambridge (2004)
Acknowledgements
The revised paper benefited from the comments of five anonymous referees. Special thanks are due to Dr. Alper Şen for suggestions.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Pınar, M.Ç. On explicit solutions of a two-echelon supply chain coordination game. Optim Lett 12, 661–673 (2018). https://doi.org/10.1007/s11590-018-1243-0
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11590-018-1243-0