Competition and Cooperation in a Two-Stage Supply Chain with Demand Forecasts

Tetsuo Iida () and Paul Zipkin ()
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Tetsuo Iida: Faculty of Business Administration, Komazawa University, Tokyo 154-8525, Japan
Paul Zipkin: The Fuqua School of Business, Duke University, Durham, North Carolina 27708

Operations Research, 2010, vol. 58, issue 5, 1350-1363

Abstract: We consider a serial supply chain with one supplier and one retailer. Each obtains some demand forecast information, which may be shared or not. We investigate the members' benefits from sharing information. The forecasts follow a variant of the Martingale model of forecast evolution (MMFE). We construct a simple transfer-payment scheme to align the players' incentives with that of the overall system. The main finding is that, unless the players' incentives are aligned in this way, sharing information makes little sense. It might hurt one or the other player and the system as a whole.

Keywords: inventory/production; multi-item; multiechelon; multistage; policies; review/lead times; games/group decisions; noncooperative (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (8)

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