A Single Buyer-Single Supplier Bargaining Problem with Asymmetric Information - Theoretical Approach and Software Implementation

This paper is focused on the coordination of order and production policy between buyers and suppliers in supply chains. When a buyer and a supplier of an item work independently, the buyer will place orders based on his economic order quantity (EOQ). However, the buyer’s EOQ may not lead to an optimal policy for the supplier. It can be shown that a cooperative batching policy can reduce total cost significantly. Should the buyer have the more powerful position to enforce his EOQ on the supplier, then no incentive exists for him to deviate from his EOQ in order to choose a cooperative batching policy. To provide an incentive to order in quantities suitable to the supplier, the supplier could offer a side payment. One critical assumption made throughout in the literature dealing with incentive schemes to influence buyer’s ordering policy is that the supplier has complete information regarding buyer’s cost structure. However, this assumption is far from realistic. As a consequence,...

• Type: Conference
• Year: 2003
• Where: HICSS
• Authors: Eric Sucky
• Keywords: Biometrics, Buyer, Cooperative Batching Policy, Cost Structures, HICSS 2003, System Sciences