Publication Type

Conference Proceeding Article

Publication Date

12-2009

Abstract

We propose a market-based information aggregation mechanism to manage the supply side uncertainty in the supply chain. In our analytical model, a simple supply chain consists of a group of retailers who order a homogeneous product from two suppliers. The two suppliers differ in their ability to fulfill orders – one always delivers orders and the other fulfills orders probabilistically. We model the supply chain decisions as a Stackelberg game where the supplier who has uncertain reliability decides a wholesale price before the retailers who independently receive signals about the supplier’s reliability determine their sourcing strategies. We then propose an information market to trade binary contracts with payoffs contingent on the supplier’s true reliability. Using a simple uniform demand distribution, we demonstrate that the market-based information aggregation mechanism improves the overall supply chain efficiency.

Keywords

Information market, Supply chain, Uncertainty, Game theory

Discipline

Computer Sciences | Operations and Supply Chain Management

Research Areas

Information Systems and Management

Publication

Exploring the Grand Challenges for Next Generation E-Business: 8th Workshop on E-Business, WEB 2009, Phoenix, AZ, USA, December 15, 2009, Revised Selected Papers

Volume

52

First Page

80

Last Page

95

ISBN

9783642174490

Identifier

10.1007/978-3-642-17449-0_8

Publisher

Springer Verlag

City or Country

Berlin

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://dx.doi.org/10.1007/978-3-642-17449-0_8

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