Information sharing and service channel design in the presence of forecasting demand

This paper investigates the issue of demand forecast sharing in a supply chain, in which either the manufacturer or the retailer conducts demand-enhancing service. In the mode with manufacturer conducting service (Mode M), our analysis shows that if the service efficiency is high (low), the retailer should voluntarily (not) share its demand forecast. If the service efficiency is moderate, a side-payment contract or a bargaining mechanism can induce the retailer to share. In the mode with retailer conducting service (Mode R), no information sharing is the unique equilibrium. In both modes, supply chain members are generally better off when their forecasts become more accurate. Moreover, the positive impact of more accurate forecasts on both the manufacturer and the retailer is generally much stronger in Mode R than in Mode M. Finally, we find that both firms prefer Mode M to Mode R if the service efficiency is high, while they prefer Mode R if the service efficiency is low.