Information Sharing Decisions in a Dual-Channel Supply Chain with Demand Disruption

In a dual-channel supply chain consisting of one manufacturer and one retailer with demand disruption, the retailer is often more sensitive to the disruption information than the manufacturer. In this paper, Stackelberg game and optimization theory are used to investigate whether demand disruption information will be beneficial for both the manufacturer and the retailer. Optimal wholesale price, retail price, sale price in the direct channel, profit of the retailer and profit of the manufacturer are obtained respectively both in the context of information sharing and no information sharing. Furthermore, conditions under which demand disruption information should be shared and an incentive mechanism for the manufacturer to motive the retailer to share the demand disruption information are also provided. Results show that demand disruption magnitude is an important factor influencing information sharing decisions of the retailer. At last, a numerical example is taken to illustrate the results.