Industrial Engineering and Management Systems

Korean Institute of Industrial Engineers (대한산업공학회)
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Asymmetric Information Supply Chain Models with Credit Option

  • Zhang, Xu (School of Mathematical and Geospatial Sciences, RMIT University) ;
  • Zeephongsekul, Panlop (School of Mathematical and Geospatial Sciences, RMIT University)
  • Received : 2013.01.15
  • Accepted : 2013.08.18
  • Published : 2013.09.30
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Abstract

Credit option is a policy that has been studied by many researchers in the area of supply chain management. This policy has been applied in practice to improve the profits of supply chain members. Usually, a credit option policy is proposed by the seller, and often under a symmetric information environment where members have complete information on each others' operations. In this paper, we investigate two scenarios: firstly, the seller offers a credit option to the buyer, and secondly, the buyer attempts to stretch the length of the credit period offered by the seller. The proposed model in both scenarios will be investigated under an asymmetric information structure where some information are private and are only known to the individual who has knowledge of this information. The interactions between buyer and seller will be modeled by non-cooperative Stackelberg games where the buyer and seller take turn as leader and follower. Among some of the numerical results obtained, the seller and buyer's profits obtained from symmetric information games are larger than those obtained from an asymmetric information game in both scenarios. Furthermore, both buyer and seller's profit in the second scenario are better than in the first scenario.

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References

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