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

Author

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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)

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.

Suggested Citation

  • Tetsuo Iida & Paul Zipkin, 2010. "Competition and Cooperation in a Two-Stage Supply Chain with Demand Forecasts," Operations Research, INFORMS, vol. 58(5), pages 1350-1363, October.
    • Handle: RePEc:inm:oropre:v:58:y:2010:i:5:p:1350-1363
    DOI: 10.1287/opre.1100.0809
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    References listed on IDEAS

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    3. Zhu, Stuart X., 2017. "Approximate solutions and cost error bounds for quantity flexibility replenishment," International Journal of Production Economics, Elsevier, vol. 193(C), pages 306-315.
    4. Taher Ahmadi & Zümbül Atan & Ton de Kok & Ivo Adan, 2019. "Optimal control policies for an inventory system with commitment lead time," Naval Research Logistics (NRL), John Wiley & Sons, vol. 66(3), pages 193-212, April.
    5. Jairo R. Montoya-Torres & Diego A. Ortiz-Vargas, 2014. "Collaboration and information sharing in dyadic supply chains: A literature review over the period 2000–2012," Estudios Gerenciales, Universidad Icesi, November.
    6. Wu, Xiangxiang & Zha, Yong & Yu, Yugang, 2022. "The developer’s sourcing strategy in the presence of a competing manufacturer and consumers’ two-dimensional differentiated preferences," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 158(C).
    7. Zha, Yong & Wu, Xiangxiang & Liu, Haonan & Yu, Yugang, 2023. "Impact of a Platform Developer's Entry on the Device Manufacturer with Different Power Structures and Revenue Models," Omega, Elsevier, vol. 115(C).
    8. Sechan Oh & Özalp Özer, 2013. "Mechanism Design for Capacity Planning Under Dynamic Evolutions of Asymmetric Demand Forecasts," Management Science, INFORMS, vol. 59(4), pages 987-1007, April.

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