Seller-buyer models of supply chain management with an asymmetric information structure

A seller-buyer supply chain represents a network consisting of a seller who wholesales a product to a buyer, who in turn retails it to the consumer. Most seller-buyer supply chains are modeled by non-cooperative and cooperative games under a deterministic and symmetric information pattern. Under a symmetric information pattern, the seller and buyer have complete information on each other's operations. However, in a supply chain, the buyer and seller, being independent entities, have private information about various aspects of their businesses which are not common knowledge. In this paper, several seller-buyer supply chain models are proposed under an asymmetric information pattern. The proposed models rely on the fact that the seller's setup/purchase costs are unknown to the buyer and the buyer withholds certain information related to market demand. The relationships between seller and buyer are modeled by non-cooperative Stackelberg games where buyer and seller take turn as leader and follower. In addition, a semi-cooperative model, where sharing marketing expenditure is used as an incentive strategy to reveal information, is proposed. Finally, numerical examples presented in this paper, including sensitivity analysis of some key parameters, seek to compare results between the different models considered.