COORDINATION OF A BUYER-VENDOR SUPPLY CHAIN FOR A PERISHABLE PRODUCT UNDER SYMMETRIC AND ASYMMETRIC INFORMATION

Abstract

We consider a two-level supply chain for a perishable product with stock dependent demand, and study the supply chain coordination issues with quantity discount contract under both symmetric and asymmetric information. We design an optimal quantity discount contract for the vendor, and show that the quantity discount contract can coordinate the supply chain under symmetric information. However, the vendor is not able to realize supply chain coordination with only quantity discount contract if the buyer's holding cost is private information since the buyer may keep this information private for bargaining a higher price discount. Nevertheless, quantity discount contract is still beneficial to the vendor as compared to the case without quantity discount. Numerical experiments are conducted to demonstrate the theoretical results.