Single sourcing from a supplier with unknown efficiency and capacity
Sébastien Mitraille  1@  , Christophe Bernard  1@  
1 : Toulouse Business School  (TBS Business School)
Toulouse Business School

We characterize a retailer's optimal order when its supplier's unknown marginal cost of production either has a low intercept but is increasing, or is constant, or when a lower intercept is associated to a steeper marginal cost and reciprocally. Asymmetric information results in two kinds of distortions. When demand is large enough, the retailer under-purchases to all types except to the least capacity constrained one, and the retail price increases. When demand is low enough, the retailer over-purchases to all types except to the most efficient one, and when the product is perishable the retail price decreases. For an intermediate demand, the retailer over- or under-purchases except from the two extreme types as well as an intermediate one. Bunching occurs for an interval of types next to the latter. The optimal order is not always continuous with respect to the seller's type.


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