Two-stage Supply Contracts Study Under Asymmetric Demand Information

With the development of science and technology and the increasing complexity of the market environment, the market demand has shown increasing uncertainty. In a supply chain system comprised of a supplier and a manufacturer, they have the different ability to obtain the demand information because of the two different localtions. There exists asymmetric demand information between them. The manufacturer is relatively closer to the market than the supplier. Thus he can obtain more demand information to forecast the demand information more accurately. In order to extort more interests, he often chooses to hide information or transfer the false information to the supplier. The supplier makes capacity investment and produce based on the demand forecast. If the demand information distortion, it will bring the supplier great losses. Therefore, under asymmetric demand information, In order to reduce economic loss and improve the economic benefit, it’s very significant for supplier to study how to grasp the accurate market demand information to design a scientific supply contract in the operations management.This paper takes the supplier as a leader and studys the designing of supply contract including two parameters which is wholesales quantity and price combined with the characteristic of censor demand information (CDI) and inventory transfer (IT) in the case of asymmetric demand information and there existing two possible levels of demand. During the study, the pooling contract (PC) is used in the first stage and the screening contract (SC) is used in the second stage. And demand forecast update method is used according to the observed demand realizing at the end of the first stage. Based on the related theories and method such as dynamic programming, the dynamin principal-agent theory and the principle of display and so on, we establish three models:(1) Considering the possibility of existing CDI, we study the problem of two-stage supply contracts design under asymmetric demand information assuming no inventory transfer (NIT); (2) Considering the possibility of existing IT, we study the problem of two-stage supply contracts design under asymmetric demand information assuming perfect demand information (PDI) can be observed at the end of the first stage; (3) Considering both CDI and IT, we study the problem of two-stage supply contracts design under asymmetric demand information. We analyse the three models with the optimization theory and method and find the optimal solutions. Next we show a numerical example of the three cases respectively. Finally, we give the numerical analysis to the numerical example. In the case of no inventory transfer and considering inventory transfer, we compare the two-stage optimal supply contracts with perfect demand information update method and the censored demand information method. We find that the ability of the censored demand information method to reveal the demand information is stronger.This paper creatively considers the characteristic of CDI and IT when studying the problem of two-stage supply contracts design under asymmetric demand information. The background is more realistic and the research has certain practical reference value to the suppliers under asymmetric demand information in how to design scientific supply contracts.