The interplay between strategic inventories and cost misreporting in supply chains

作者：Chen, Pengyu; Liu, Xu; Zhou, Pin^*; Zhu, Stuart X.

来源：TRANSPORTATION RESEARCH PART E-LOGISTICS AND TRANSPORTATION REVIEW, 2022, 163: 102737.

DOI：10.1016/j.tre.2022.102737

• Strategic inventories
• Cost information asymmetries
• Downstream competition
• Cost misreporting

For retailers, carrying inventories may force suppliers to lower wholesale prices in their futuretransactions. Previous literature on strategic inventories has assumed that the unit productioncost of the supplier is negligible. In practice, the production cost is the supplier's privateinformation. In this research, we study the impact of supplier's cost misreporting behavior onsupply chain decisions in a two-period strategic inventory basic model consisting of a retailerand a supplier. We find that the retailer's retention of strategic inventories can incentivize thesupplier to misreport costs. As the retailer carries inventories, the supplier can misreport ahigher cost, thus increasing the wholesale price and supplier's profit margins. Moreover, wefind that misreporting behavior hurts the retailer and exacerbates the double marginalizationeffect, leading to inefficiency in the supply chain. The supplier's profit is further improved whenthe supplier can misreport the different costs in each period. When we consider competitionfrom downstream retailers, only if both two retailers do not hold strategic inventories, can theyprevent the supplier from misreporting. The retailer's detection measures are needed to ensure the coordination role of strategic inventory

• 单位
  华中农业大学