Supplier Encroachment With Production Cost Factors

Recently,driven by the booming e-commerce and logistics industry,supplier encroachment has become a common business phenomenon in various industries.Production cost,as an important factor in the production and operation activities of suppliers,has a substantial impact on the decision-making and profitability of supply chain members.Supplier encroachment will bring essential influence on market structure and demand share,and further highlight the significant impacts of production cost factors on the profitability of each member.In addition,demand information asymmetry between upstream suppliers and downstream retailers will have important impacts on the channel efficiency and profitability of each member,and thus bring many challenges in production and operation.Based on these,this dissertation aims to study supplier encroachment with considerations of production cost factors and demand information asymmetry,and the main research results are as follows.First,this dissertation investigates supplier encroachment with production cost reduction under asymmetric demand information.This dissertation develops the signal game model for encroachment under asymmetric information,solves and analyzes the equilibrium outcomes,and obtains the interactions between cost reduction and encroachment under asymmetric information and their impacts on the supply chain members.This dissertation establishes the game models for encroachment under no information and full information,and obtains information management insights.Results show that when the supplier does not encroach,both members can benefit from cost reduction.When the supplier encroaches,cost reduction benefits the supplier but has no effect on the retailer.When the direct selling efficiency is not too low,the supplier benefits from encroachment,and when the direct selling efficiency is low enough,the retailer benefits from encroachment.When the supplier does not encroach,the supplier prefers full information,and the retailer prefers to have an information advantage.When the supplier encroaches,it prefers full information,if the direct selling efficiency is relatively high,the retailer prefers symmetric information;as the direct selling efficiency decreases,both members benefit from the retailer’s information advantage.Next,this dissertation investigates supplier encroachment with production cost learning under asymmetric demand information.This dissertation develops the signal game model for encroachment under asymmetric information,solves and analyzes the equilibrium outcomes,and obtains the interactions between cost learning and encroachment under asymmetric information and their impacts on the supply chain members.This dissertation establishes the game models for encroachment under symmetric information,and obtains the implications into information management.Results show that cost learning increases the possibility that the retailer will downwards distort its order quantity in order to signal the real demand information to the supplier when the market is small,which makes it easier for both members to suffer from encroachment.When the supplier does not encroach,both members can benefit from cost learning.When the supplier encroaches,the supplier benefits from cost learning only when the direct selling efficiency is relatively high,and the retailer always suffers from cost learning.Encroachment is beneficial to the retailer only when the direct selling cost is high enough,and benefits the supplier only when the direct selling cost or cost learning efficiency is relatively low.When the supplier does not encroach,the supplier prefers full information and the retailer prefers asymmetric information.When the supplier encroaches,except for the case of intermediate direct selling efficiency(the retailer can benefit from the information advantage),both members prefer full information,and the higher cost learning efficiency can prompt both members to reach a consensus on full information.Finally,this dissertation investigates supplier encroachment with production cost learning under different contract modes.The dissertation develops the game models for encroachment under the wholesale price contract and the consignment contract,solves and analyzes the equilibrium outcomes,and obtains the interactions between cost learning and encroachment under the two contract modes and their impacts on the supply chain members.Results show that under the consignment contract,when the supplier does not encroach,cost learning will always benefit the supplier,and has no any impact on the retailer.When the supplier encroaches,if the retail cost is intermediate,the retailer benefits from cost learning;if the direct selling cost is not high,the supplier benefits from cost learning.As compared to the wholesale price contract,the consignment contract is more likely to cause both members to achieve a win-win result from encroachment,and it is less likely to cause the supplier to benefit from encroachment and the retailer to suffer from encroachment.When the direct selling cost is relatively low,both members prefer the consignment contract;when the direct selling cost is relatively high,both members prefer the wholesale price contract;when the direct selling cost is intermediate,both members cannot agree on a contract mode.This dissertation combines production cost factors,demand information structure and contract modes to study the operation decisions and strategic interactions of the members in the supply chain with supplier encroachment,and enriches and expands the existing research results in the field of dual-channel supply chain management and information sharing,providing reference in decision-making for relevant supply chain firms.