Journal article

Incentive-Compatible in Dominant Strategies Mechanism Design for an Assembler under Asymmetric Information

Z Li, J Ryan, L Shao, D Sun

Production and Operations Management | Wiley | Published : 2019


Assembly systems, in which various components are sourced from multiple suppliers and assembled into the final product, which is sold to external customers, are found in a variety of industries. In many practical settings, the assembler possesses incomplete information regarding the marginal cost of each supplier. This lack of complete information poses a challenge for the assembler in designing contract mechanisms. In this paper, we investigate the assembler's contract design problem by proposing a contracting mechanism that can significantly outperform an alternative mechanism that was previously presented in the literature, especially when the uncertainty regarding customer demand is sign..

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University of Melbourne Researchers