Allocation of Cost Savings in an O2O Information-sharing Supply Chain

This paper investigates how information sharing in O2O (online-to-offline) business model, in which the platform is a website or mobile application that acts as a liaison between physical stores and Internet users, influences allocation of cost savings of a four-player supply chain with an upstream supplier, a downstream retailer, logistics service provider and platform. We aim to maximize cost saving through information sharing in different coalitions of O2O business models, which take advantage of information sharing among demand and product-inventory data collected by the platform for increasing in-store sales. We analyze the effect of cost savings in various feasible coalitions followed by the computation of the expected cost incurred in various coalitions. This paper adopts the Shapley value and Banzahf index to allocate cost savings to associated stakeholders in the chain. We present numerical analysis to examine the impacts of information sharing on cost savings in different allocation scheme.