This paper considers a food supply chain where multiple suppliers provide completely substitutable food products to two manufacturers. Meanwhile, the suppliers face yield uncertainty and the manufacturers face uncertain production costs that are private information. While the suppliers compete on price, the manufacturers compete on quantity. We build a stylized multistage game theoretic model to analyze the issue of vertical cost-information sharing (VCIS) within the supply chain by considering key parameters, including the level of yield uncertainty, two manufacturers’ cost correlation, the correlated coefficient of suppliers’ yield processes, and the number of suppliers. We study the suppliers’ optimal wholesale price and the manufacturers’ optimal order quantities under different VCIS strategies. Finally, through numerical analyses, we examine how key parameters affect the value of VCIS to each supplier and each manufacturer, respectively. We found that the manufacturers are willing to share cost information with suppliers only when the two manufacturers’ cost correlation is less than a threshold. While a high correlated coefficient of suppliers’ yield processes and a large number of suppliers promote complete information sharing, a high level of yield uncertainty hinders complete information sharing. All these findings have important implications to industry practices.

+More

food supply chain vertical costinformation sharing vcis complete information stylized multistage game theoretic model uncertain production costs two manufacturers cost correlation manufacturers optimal order quantities suppliers optimal wholesale price vcis strategies correlated coefficient of suppliers yield processes industry practices

Junjian Wu,Haiyan Wang,Henry Xu,.Vertical Cost-Information Sharing in a Food Supply Chain with Multiple Unreliable Suppliers and Two Manufacturers. 2017 (),.

Junjian Wu,Haiyan Wang,Henry Xu,"Vertical Cost-Information Sharing in a Food Supply Chain with Multiple Unreliable Suppliers and Two Manufacturers" 2017

Junjian Wu,Haiyan Wang,Henry Xu,"Vertical Cost-Information Sharing in a Food Supply Chain with Multiple Unreliable Suppliers and Two Manufacturers"