Optimal Strategies of Members with Asymmetric Information Considering Risk-averse Behaviors in a Dual-channel Supply Chain

In this paper, we consider a dual-channel supply chain constructed by one manufacturer with direct channel and one retailer. When the manufacturer set up direct channel, the risk-averse retailer may deliberately distort the order quantity for the purpose of maximizing own utilities or profits. We use game theory to study how the manufacturer accurately judge the true market size when the demand information is asymmetric. We do numerical experiments to give the comparisons of expected utilities of both members in the supply chain under asymmetric and symmetric information. Major research contributions that we introduce the risk-averse behavior to the dual-channel supply chain with asymmetric information. We study how the risk-averse behaviors influence the optimal decisions and the utilities of both members. We find that the retailer has more accurate market size, however, the manufacturer only know the true market size according to the retailer's order quantity. We also present some other managerial insights.