Study on supply chain coordination with lead-time compression and asymmetric information

In dynamic environment, for the supply chain with time-varying demand forecast accuracy, although the lead-time compression may raise forecast accuracy, it may produce crash costs. Manufacturer owns the true information of crash costs and tells higher costs to retailer in order to get more profit. This paper takes the above situations into consideration, develops a supply chain coordination model with asymmetric information, which consist one retailer and one producer, makes the decision how much retailer orders goods and how long manufacturer compresses the lead-time. The study results that retailer has to pay extra information rent to reveal the private information of manufacturer. Additionally, based on the combination of buy-back contract and cost sharing contract, the supply chain can get to the state of Pareto efficiency. Finally, a numerical example is given to illustrate the theoretical results of the proposed model and conducts sensitivity analysis on parameters of the proposed model.