Pricing and Ordering Strategies in a Two-Echelon Supply Chain with Asymmetric Demand Information

This paper studies the pricing and ordering policy of a two-echelon supply chain with a supplier and a retailer. The retailer has accurate demand information while the supplier does not. The research shows that the uncertainty of the supplier on the demand will lead to a reduction of the supplier´s expected profit, which also shows the value of information. Moreover, if the supplier overestimates the demand, the actual expected profit will be less than the expected profit he wishes; however, if the supplier underestimates the demand, the actual expected profit will be higher than the expected profit he wishes.