Information sharing in an E-tailing supply chain for fresh produce with freshness-keeping effort and value-added service

Abstract

This paper explores information sharing in an e-tailing supply chain for fresh produce. We consider a supply chain consisting of a supplier providing freshness-keeping effort and an e-tailer providing value-added service. The e-tailer has private information about uncertain demand and decides whether to share the information with the supplier. We find that information sharing may benefit the e-tailer and that the e-tailer chooses to share information voluntarily when the freshness elasticity is above a certain threshold. We also show that information sharing cooperation is more likely to occur when the supplier is more economical in terms of freshness-keeping investment, or when the e-tailer is more efficient in terms of service investment. Then, we design an incentive contract with a transfer payment that stimulates the e-tailer to share information with the supplier. Next, we investigate the impacts of information sharing on equilibrium decisions. We show that under voluntary information sharing, the e-tailer increases (decreases) both the retail price and service level under high (low) demand information sharing. However, under information sharing with compensation, the e-tailer decreases (increases) the service level but may increase (decrease) or decrease (increase) the retail price under high (low) demand information sharing. Finally, from a social policymaking perspective, we discuss the impacts of information sharing on the expected social welfare. Interestingly, we find that whether information sharing with compensation improves the expected social welfare depends on the freshness elasticity.