The retailer’s information sharing decisions with manufacturer’s encroachment and production learning effects

If the manufacturer can efficiently reduce costs and boost overall profits throughout the supply chain, he can send some incremental surplus to the retailer to motivate him to share his precise demand information. We study a two-period dual-channel supply chain where a manufacturer sells through a retailer with an advantage in demand information. The manufacturer can encroach and use production learning effects to reduce costs. Based on six scenarios under the “encroachment-dominated and production-learning effect-dominated and dual-factor” approaches, we investigated how the manufacturer’s encroachment and the production-learning effect affected the retailer’s decisions to share information. Some interesting results are obtained. First, a single-win, win–win, or lose–lose situation is generated for the supply chain participants by the dynamic competition mechanism under the combined effects of encroachment and the production learning effect. When more ambiguous demand information is cooperatively provided, both the retailer and manufacturer will benefit from information sharing. The win–win area increases with higher direct selling costs, whereas the win–win area decreases with increased production learning effects. Second, the retailer’s information sharing benefits more from a higher level of the production learning effect when demand information is unclear, and information sharing benefits more from a lower level of the production learning effect when demand information is more accurate. In addition, in terms of profitability following information sharing, we ultimately find that implementing both cost cutting and channel expansion based on unilateral payment contracts is the best incentive strategy to encourage retailers to share information. Finally, we obtain some management insights that support supply chain parties in making decisions regarding the resolution of channel conflicts and the realization of information cooperation.