Coordination in Production with Asymmetric Information: Theoretical and Experimental Investigations

Southern Methodist University, Dallas TX

Investigators

Abstract

For supply chains to operate efficiently firms in the chain must coordinate their actions. However, under both field and laboratory conditions, coordination failures are common. One factor responsible for these failures is that individual firms possess unique information and lack the incentive to share that information with others in the supply chain. In this proposal the PI outlines research that explores and experimentally tests three mechanisms to induce information sharing and alleviate coordination failures. The first is generating common demand forecasts, the second is communicating production decisions among suppliers and the third is joint investment in improved planning. The relative efficacy of these three mechanisms will be examined in the case of symmetric and asymmetric suppliers. Results of this research will help to explain and predict coordination problems in supplier relationships, and identify the likely benefits of varying mechanisms in overcoming them. This work will deepen our understanding of how to increase the efficiency and competitiveness of US firms.