Channel coordination in the supply chain with the one-shot decision theory

This paper extends the standard newsvendor problem to a channel coordination problem in the supply chain with an innovative product. Acting as a Stackelberg leader, the manufacturer sells to a retailer facing a newsvendor problem. The partly known demand information is represented by a possibility distribution. Since the life cycle of the innovative product is short, how to determine the optimal order amount is a typical one-shot decision problem. With the one-shot decision theory, Stackelberg equilibriums are obtained for the optimal wholesale price of manufacturer and the optimal order quantity of retailer with symmetric and asymmetric information. Different types of retailer, called active retailer and passive retailer, lead to different Stackelberg equilibriums.