How To Coordinate The Supply Chain With Asymmetry Cost Information And Rfid Technology Conditions

As an immediate area of research focus, coordination of a modern supply chain has much economic significance. Inefficiency occurs when each level of a supply chain acts on his/her own interests and makes decisions on the basis of inaccurate information. A large number of literatures have studied and designed contracts to improve efficiency in supply chains, while most of them assume that the supplier’s production cost per unit is fully observed by all the firms in the supply chain, and assume that there are no discrepancies between the recorded inventory quantities in the system and the on-hand inventory quantities truly available for sale.In this paper, considering a supply chain subjecting to stochastic demand, we present a newsvendor model to study the game process between a supplier owning private cost information and a retailer suffering from inventory inaccuracy problem. We present that by setting the contract parameters appropriately, both partners have the right incentive for maximizing the total supply chain profit:the supplier share information actively by choose the contract designed for his marginal production cost, while the retailer’s rational decision concurs with the overall optimal decision.We further consider introducing the RFID technology into the supply chain to eliminate the inventory inaccuracy and discuss the influence brought by the cost of RFID tab to the coordination mechanism and the interval of the coordinating contract parameters.Finally, we study the supply chain performance and the interval of the coordinating contract parameters under different situations by illustrate the model through some numerical assumptions, establish and highlight the conditions under which the RFID technology is preferable to the system.