Value of supplier's capacity information in a two-echelon supply chain

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BAKAL İ. S., ERKİP N. K., GÜLLÜ A. R.

ANNALS OF OPERATIONS RESEARCH, vol.191, no.1, pp.115-135, 2011 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 191 Issue: 1
  • Publication Date: 2011
  • Doi Number: 10.1007/s10479-011-0937-9
  • Journal Name: ANNALS OF OPERATIONS RESEARCH
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus
  • Page Numbers: pp.115-135
  • Keywords: Value of information, Limited capacity, Rationing game, ASYMMETRIC-INFORMATION, COST INFORMATION, CONTRACTS, MARKET, POLICY
  • Middle East Technical University Affiliated: Yes

Abstract

In traditional supply chain models it is generally assumed that full information is available to all parties involved. Although this seems reasonable, there are cases where chain members are independent agents and possess different levels of information. In this study, we analyze a two-echelon, single supplier-multiple retailers supply chain in a single-period setting where the capacity of the supplier is limited. Embedding the lack of information about the capacity of the supplier in the model, we aim to analyze the reaction of the retailers, compare it with the full-information case, and assess the value of information and the effects of information asymmetry using game theoretic analysis. In our numerical studies, we conclude that the value of information is highly dependent on the capacity conditions and estimates of the retailers, and having information is not necessarily beneficial to the retailers.