Proposal of a Collaborative Method for Contract Negotiations between Manufacturer and Retailer

Abstract

During contract negotiations between two companies in a supply chain, the total profit of the two companies based on the agreed contract price and contract volume is usually lower than the monopoly profit due to the asymmetry of the information. Additionally, with such an agreement, there is a large difference in the profit distribution between the two companies. The effectiveness of preventing profit and profit sharing together with information sharing between companies has been confirmed in many previous studies, but it is very difficult to realize sharing of confidential information such as cost information among non-affiliated companies with low reliability. In this study, by proposing a collaborative negotiation method with a coordinator, prediction function and negotiations guide function, cost information sharing could be realized in a pseudo-manner. Mitigation effects for declining SC profit and profit allocation are shown in the results of this study.