Information sharing for competing supply chains with demand disruption

¹ Department of Mathematics, Nanjing University of Aeronautics and Astronautics, Nanjing, Jiangsu 210016, P.R. China.
kbchen@nuaa.edu.cn; fml1585173@163.com
² School of Economics and Commerce, South China University of Technology, Guangzhou, Guangdong 510006, P.R. China.
yang@scut.edu.cn

^∗ Corresponding author

Received: 20 November 2015
Accepted: 1 September 2016

Abstract

We investigate pricing decisions and information value in two competing supply chains, each consisting of one manufacturer and one retailer. Both retailers are engaged in Bertrand retail competition and are endowed with the private information on the disrupted demand. Three information sharing scenarios have been considered, i.e., information sharing in both chains, information sharing in only one chain, and information sharing in neither chain. For each information scenario, there always exists robustness for each manufacturer’s production plan. That is, when the disrupted amount of the market demand is sufficiently small, the manufacturer’s production plan or the retailer’s order quantity will be unchanged. Meanwhile, we also study the information value by comparing these three information scenarios, and find that the information value not only works in one chain directly, but also does in the competing chain indirectly. Through comparative analysis, we find that the retailer is reluctant to share his private information on the disrupted demand with his partner because of the fear of information leakage. Meanwhile, the performance of the whole chain may become worse off if the information of disrupted demand is shared in this chain.