Long-Term Contracting: The Role of Private Information in Dynamic Supply Risk Management

• 成果类型: Article
• 署名作者: Gao, Long
• 署名单位: University of California System; University of California Riverside
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.12347
• 发表日期: 2015
• 页码: 1570-1579
• 关键词: Principal-agent model; INVENTORY CONTROL; mechanism design; asymmetric information; CAPACITY INVESTMENT; demand; chain; SYSTEM; COMPETITION; optimality

摘要

We examine the critical role of evolving private information in managing supply risk. The problem features a dyadic channel where a dominant buyer operates a multiperiod inventory system with lost sales and fixed cost. He replenishes from a supplier, whose private state of production is vulnerable to random shocks and evolves dynamically over time. We characterize the optimal inventory policy with a simple semi-stationary structure; it distorts order quantity for limiting information rent only in the initial period; the optimal payment compensates for production cost in every period but concedes real information rent only in the initial period. These properties allow us to derive an easy-to-implement revenue-sharing contract that facilitates ex ante strategic planning and ex post dynamic execution. This work advances our understanding on when and how to use private information in dynamic risk management.