Information sharing and profit allotment based on supply chain cooperation

To maximize customer value created by a supply chain system as a whole, one of the key issues in supply chain management is how to have profit and benefit properly shared between partners in an effective manner of the supply chain integration. In this regard, information sharing between partners plays a rather important role in business process and management integration of the supply chain. The paper focuses on analyzing the value created from information sharing by decreasing inventory level and on investigating the collaborative mechanism of providing incentive to retailer by upstream partner via sharing profit gained information sharing in the context of three‐echelon supply chain system. The issue of dealing with the interest conflict between the supply chain as a whole and individual partners is addressed based on information sharing analysis by means of cooperative game approach, a graphic model with three‐dimensions is developed to depict the possible cooperative solutions of profit allotment between partners, and a problem solving method addressing how the profit allotment between partners can effectively motivate the partners to be cooperative with each other is presented as well.