Contract Design With Supply Risk And The Effect Of Delivery Time Under Asymmetric Information

With the globalization of the supply chain, supply risk and delivery date are increasingly becoming the focus of researchers in the field of supply chain. At the same time, the supplier and the receiver of the distributed supply chain are not community of interests, so that the party which owns the private information will not disclose it to the other party for its own interest, leading the party which does not have the private information to be faced with more uncertainty in its decision-making. When faced with asymmetric information about the supply risk and delivery date, it is of great practical significance to identify the type of the other party and achieve the maximized profit through the contract design. This paper adopts the theories and methods of operations research, game and other disciplines, and discusses the design of the contract with the asymmetric information of supply reliability and the investment effect coefficient of lead time compression. In this paper, the author focuses the study on the following two aspects.First, this paper studies the contract design considering supply disruption or delay in delivery under asymmetric information. We consider a supply chain consisting of one manufacture and one supplier, study the manufacturer's procurement contract design in the presence of supply disruption or delay in delivery, given that the supplier has private information about his supply reliability. The model analyzes both parties' decisions under symmetric and asymmetric information and the value of information asymmetry about supply risk. The results indicate that, compared with the optimal decisions under full information, when the supplier is privately informed on his high or low type of initial reliability, the manufacturer may set a higher unit penalty for the supplier with high initial reliability, which leads to the supplier with high initial reliability reduce his lead time.Meanwhile, the manufacturer may order none from the supplier with low initial reliability due to information asymmetry, which causes zero information rent for the supplier with high initial reliability.Second, the contract design considering time-sensitive demand and pricing under asymmetric information examines the scenario in which a manufacturer sells products through an on-line retailer and the retailer has private information on his investment effect coefficient of lead time compression. The manufacture needs to design contract for the on-line retailer and determine price for the product. In the model, the manufacture offering a menu of quantities to the on-line retailer. After the on-line retailer chooses the specific quantity, the manufacture can acquire the retailer's real investment effect coefficient of lead time compression. The paper finds the optimal menu of quantities and sets the optimal price. The results show that, in order to acquire the on-line retailers' private information, the manufacture has to pay information cost. However, reasonable price can help the manufacture decrease the information cost as much as possible.