Wholesale-price contract of supply chain with information gathering |
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Authors: | Xinhui Wang Xianyu Wang Yingsheng Su |
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Institution: | 1. School of Computer Science and Technology, Southwest University for Nationalities, Chengdu, 610041 Sichuan, PR China;2. School of Business and Management, Sichuan University, Chengdu, 610064 Sichuan, PR China;3. Statistics School, Southwestern University of Finance and Economics, Chengdu, 611130 Sichuan, PR China |
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Abstract: | This paper investigates a wholesale-price contract of supply chain under the endogenous information structure. This supply chain consists of one supplier and one retailer during the selling season. The retailer does not know his selling cost but can spend resources to acquire information. The supplier offers a contract, which induces the retailer to gather information and generate more production orders with beta costs. We find that there exists an upper bound of the information gathering cost such that the supplier induces the retailer to gather information. The increasing cost of information gathering may decrease the order quantity and wholesale price. Moreover, the cost beta has an impact on the expected profits of the two parties. With the increasing cost of information gathering, the supplier’s expected profit is reduced, while that of the retailer becomes ambiguous in terms of the distribution function and the interval of selling cost information. Finally, a numerical example is presented to explain the main results. |
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Keywords: | Supply chain Wholesale-price contracts Endogenous Information gathering |
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