We consider a decentralized two-period supply chain in which a manufacturer produces a product with the benefits of cost learning and sells it through a retailer facing a price-dependent demand. The manufacturer's second-period production cost declines linearly in the first-period production, but with a random learning rate. The manufacturer may or may not have the inventory carryover option. We formulate the problem as a two-period Stackelberg game and obtain its feedback equilibrium solutions explicitly. We then examine the impact of mean learning rate and learning rate variability on the pricing strategies of the channel members, on the manufacturer's production decisions, and on the retailer's procurement decisions. We show that as the mean learning rate or the learning rate variability increases, the traditional double marginalization problem becomes more severe, leading to greater efficiency loss in the channel. We obtain a revenue-sharing contract that can coordinate the dynamic supply chain.
Zoom Link: https://uoc-gr.zoom.us/j/83682573286?pwd=jNYipRDelJIKJxLbFBOdyGC8srkhYF.1
