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Journal of Food Quality
Volume 2017, Article ID 6792545, 14 pages
https://doi.org/10.1155/2017/6792545
Research Article

Vertical Cost-Information Sharing in a Food Supply Chain with Multiple Unreliable Suppliers and Two Manufacturers

1School of Economics and Management, Southeast University, Nanjing 210096, China
2UQ Business School, The University of Queensland, Brisbane, QLD 4072, Australia

Correspondence should be addressed to Haiyan Wang; nc.ude.ues@gnawyh

Received 14 September 2017; Accepted 14 November 2017; Published 11 December 2017

Academic Editor: Chunming Shi

Copyright © 2017 Junjian Wu et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This paper considers a food supply chain where multiple suppliers provide completely substitutable food products to two manufacturers. Meanwhile, the suppliers face yield uncertainty and the manufacturers face uncertain production costs that are private information. While the suppliers compete on price, the manufacturers compete on quantity. We build a stylized multistage game theoretic model to analyze the issue of vertical cost-information sharing (VCIS) within the supply chain by considering key parameters, including the level of yield uncertainty, two manufacturers’ cost correlation, the correlated coefficient of suppliers’ yield processes, and the number of suppliers. We study the suppliers’ optimal wholesale price and the manufacturers’ optimal order quantities under different VCIS strategies. Finally, through numerical analyses, we examine how key parameters affect the value of VCIS to each supplier and each manufacturer, respectively. We found that the manufacturers are willing to share cost information with suppliers only when the two manufacturers’ cost correlation is less than a threshold. While a high correlated coefficient of suppliers’ yield processes and a large number of suppliers promote complete information sharing, a high level of yield uncertainty hinders complete information sharing. All these findings have important implications to industry practices.