Academic Journal
Technical Note—A Stationary Infinite-Horizon Supply Contract Under Asymmetric Inventory Information.
| Τίτλος: | Technical Note—A Stationary Infinite-Horizon Supply Contract Under Asymmetric Inventory Information. |
|---|---|
| Συγγραφείς: | Bensoussan, Alain1 (AUTHOR) alain.bensoussan@utdallas.edu, Sethi, Suresh1 (AUTHOR) sethi@utdallas.edu, Wang, Shouqiang1 (AUTHOR) Shouqiang.Wang@utdallas.edu |
| Πηγή: | Operations Research. Jan/Feb2025, Vol. 73 Issue 1, p270-277. 8p. |
| Θεματικοί όροι: | *Information asymmetry, *Supply chains, *Stochastic models, *Inventories, Calculus of variations |
| Περίληψη: | A New Approach to Contract Design with Private Inventory Information In a typical decentralized supply chain, a downstream retailer privately observes its inventory level and has an informational advantage over the upstream supplier. In "A Stationary Infinite-Horizon Supply Contract Under Asymmetric Inventory Information" by Bensoussan, Sethi, and Wang, the authors study how to optimally design a stationary, truth-telling, long-term contract in such a setting. In contrast to the classic first order approach in literature, they formulate the contract design as an optimization over a functional space and develop a solution approach based on the calculus of variations. They further apply their necessary optimality condition to the class of batch-order contracts, which replenish a prespecified inventory quantity for a fixed payment in each period only when the retailer has zero inventory on hand. We consider a decentralized supply chain in which a supplier sells goods to a retailer facing general random demand over an infinite horizon. The retailer satisfies the demand to the extent of the inventory on hand. The retailer has private information about the retailer's stock in each period, and the supplier offers the retailer a supply contract menu to account for the information asymmetry. We obtain a necessary condition for optimizing a long-term stationary truth-telling contract under general demand and belief distributions. We apply it to a batch-order contract, which replenishes a prespecified inventory quantity for a fixed payment in each period only when the retailer's beginning inventory becomes zero. Methodologically, we formulate the supplier's contract design as a calculus of variations problem and apply the concept of Gâteaux derivative to obtain these results. This methodology can potentially be applied to other dynamic contracting problems. Funding: A. Bensoussan acknowledges support from the National Science Foundation [Grant NSF-DMS 220 47 95]. Supplemental Material: The e-companion is available at https://doi.org/10.1287/opre.2020.0495. [ABSTRACT FROM AUTHOR] |
| Copyright of Operations Research is the property of INFORMS: Institute for Operations Research & the Management Sciences and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.) | |
| Βάση Δεδομένων: | Business Source Index |
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| Items | – Name: Title Label: Title Group: Ti Data: Technical Note—A Stationary Infinite-Horizon Supply Contract Under Asymmetric Inventory Information. – Name: Author Label: Authors Group: Au Data: <searchLink fieldCode="AR" term="%22Bensoussan%2C+Alain%22">Bensoussan, Alain</searchLink><relatesTo>1</relatesTo> (AUTHOR)<i> alain.bensoussan@utdallas.edu</i><br /><searchLink fieldCode="AR" term="%22Sethi%2C+Suresh%22">Sethi, Suresh</searchLink><relatesTo>1</relatesTo> (AUTHOR)<i> sethi@utdallas.edu</i><br /><searchLink fieldCode="AR" term="%22Wang%2C+Shouqiang%22">Wang, Shouqiang</searchLink><relatesTo>1</relatesTo> (AUTHOR)<i> Shouqiang.Wang@utdallas.edu</i> – Name: TitleSource Label: Source Group: Src Data: <searchLink fieldCode="JN" term="%22Operations+Research%22">Operations Research</searchLink>. Jan/Feb2025, Vol. 73 Issue 1, p270-277. 8p. – Name: Subject Label: Subject Terms Group: Su Data: *<searchLink fieldCode="DE" term="%22Information+asymmetry%22">Information asymmetry</searchLink><br />*<searchLink fieldCode="DE" term="%22Supply+chains%22">Supply chains</searchLink><br />*<searchLink fieldCode="DE" term="%22Stochastic+models%22">Stochastic models</searchLink><br />*<searchLink fieldCode="DE" term="%22Inventories%22">Inventories</searchLink><br /><searchLink fieldCode="DE" term="%22Calculus+of+variations%22">Calculus of variations</searchLink> – Name: Abstract Label: Abstract Group: Ab Data: A New Approach to Contract Design with Private Inventory Information In a typical decentralized supply chain, a downstream retailer privately observes its inventory level and has an informational advantage over the upstream supplier. In "A Stationary Infinite-Horizon Supply Contract Under Asymmetric Inventory Information" by Bensoussan, Sethi, and Wang, the authors study how to optimally design a stationary, truth-telling, long-term contract in such a setting. In contrast to the classic first order approach in literature, they formulate the contract design as an optimization over a functional space and develop a solution approach based on the calculus of variations. They further apply their necessary optimality condition to the class of batch-order contracts, which replenish a prespecified inventory quantity for a fixed payment in each period only when the retailer has zero inventory on hand. We consider a decentralized supply chain in which a supplier sells goods to a retailer facing general random demand over an infinite horizon. The retailer satisfies the demand to the extent of the inventory on hand. The retailer has private information about the retailer's stock in each period, and the supplier offers the retailer a supply contract menu to account for the information asymmetry. We obtain a necessary condition for optimizing a long-term stationary truth-telling contract under general demand and belief distributions. We apply it to a batch-order contract, which replenishes a prespecified inventory quantity for a fixed payment in each period only when the retailer's beginning inventory becomes zero. Methodologically, we formulate the supplier's contract design as a calculus of variations problem and apply the concept of Gâteaux derivative to obtain these results. This methodology can potentially be applied to other dynamic contracting problems. Funding: A. Bensoussan acknowledges support from the National Science Foundation [Grant NSF-DMS 220 47 95]. Supplemental Material: The e-companion is available at https://doi.org/10.1287/opre.2020.0495. [ABSTRACT FROM AUTHOR] – Name: AbstractSuppliedCopyright Label: Group: Ab Data: <i>Copyright of Operations Research is the property of INFORMS: Institute for Operations Research & the Management Sciences and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.</i> (Copyright applies to all Abstracts.) |
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| RecordInfo | BibRecord: BibEntity: Identifiers: – Type: doi Value: 10.1287/opre.2020.0495 Languages: – Code: eng Text: English PhysicalDescription: Pagination: PageCount: 8 StartPage: 270 Subjects: – SubjectFull: Information asymmetry Type: general – SubjectFull: Supply chains Type: general – SubjectFull: Stochastic models Type: general – SubjectFull: Inventories Type: general – SubjectFull: Calculus of variations Type: general Titles: – TitleFull: Technical Note—A Stationary Infinite-Horizon Supply Contract Under Asymmetric Inventory Information. Type: main BibRelationships: HasContributorRelationships: – PersonEntity: Name: NameFull: Bensoussan, Alain – PersonEntity: Name: NameFull: Sethi, Suresh – PersonEntity: Name: NameFull: Wang, Shouqiang IsPartOfRelationships: – BibEntity: Dates: – D: 01 M: 01 Text: Jan/Feb2025 Type: published Y: 2025 Identifiers: – Type: issn-print Value: 0030364X Numbering: – Type: volume Value: 73 – Type: issue Value: 1 Titles: – TitleFull: Operations Research Type: main |
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