Some two-echelon style-goods inventory models with asymmetric market information

Abstract

A "two-echelon" newsboy problem considers the interactive decisions between the "manufacturer" and the "retailer" - now recognized as two separate entities. Earlier papers on this problem assumed that the two parties share the same market information. We extend this problem by studying the situation in which the retailer has better market information than the manufacturer. Presented are several decision models that should be useful for guiding a manufacturer's decisions. Moreover, solutions to these models lead to various unexpected and interesting conclusions. For example, we found that improved retailer's market-knowledge always benefits the manufacturer and the system, though not necessarily the retailer himself. In contrast, improved manufacturer's knowledge benefits only the manufacturer himself at the expense of the retailer and of the system. © 2001 Elsevier Science B.V.