Study on the Value of Information-Sharing in Two-echelon Supply Chain under an Uncertainty Market Demand

When demand is uncertain, manufacturers and retailers often have private information on future demand, and such information asymmetry impacts strategic interaction in distribution channels. We investigate a channel consisting of one manufacturer and one retailer facing a product market characterized by short life cycle, stochastic demand, and endogenous price. This paper built extensive newsvendor models under the symmetric and asymmetric information scenarios and gave the optimal solutions as well as examined the potential benefits of sharing information. We conclude that although information sharing generally might improve channel profits but it is not feasible when the retailer underestimates the demand volatility but the manufacturer does not.