Demand Forecast and Update Based on Blockchain Technology

22 Pages Posted: 19 Jun 2020

Date Written: December 28, 2018

Abstract

This paper aims to solve the problem of information asymmetry in the supply chain through block-chain technology. We consider a drop shopping supply chain, which includes one supplier and one retailer who has more accurate demand forecast. The demand forecast of the retailer is mainly based on past selling data on a private block-chain. And the retailer can choose to join a consortium block-chain to share the demand forecast credibly. We consider three types of information sharing scenarios with a fixed cost of joining the consortium block-chain: retailer bears all the fixed cost, supplier bears part of the cost by providing a fixed subsidy, supplier bears part of the cost by providing a wholesale discount. We find the perfect Bayesian equilibrium (PBE) with threshold strategy in all three scenarios. And the numerical simulations mainly show that, the supplier’s direct subsidy and wholesale discount strategy will increase the retailer’s joining probability but hurt her expected profits. As the fixed cost increases, the expected profit both the retailer and the supply chain system will decrease at first but increase later, and finally converge to a constant. When product margin for the supplier is lower, the retailer’s willingness to join is higher. The supplier is only willing to provide subsidies when the cost is around a medium level. When the fixed cost is in a large range, the retailer will rather make a decentralized decision in in-completing information than join the consortium block-chain.

Keywords: Block-chain; Demand Fore-case; Information Asymmetry

JEL Classification: C6; L9

Suggested Citation

Zhou, Zhongbao, Demand Forecast and Update Based on Blockchain Technology (December 28, 2018). Available at SSRN: https://ssrn.com/abstract=3610795 or http://dx.doi.org/10.2139/ssrn.3610795

Zhongbao Zhou (Contact Author)

Hunan University ( email )

2 Lushan South Rd
Changsha, CA Hunan 410082
China

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