Option-based supply contracts with dynamic information sharing mechanism under the background of smart factory

Consider a smart supply chain consisting of a smart parts factory (SPF) and a smart assembly factory (SAF) under the background of smart factory where the dynamic information sharing between the SPF and SAF can be easily realized. Dynamic information sharing, different from static information sharing, can switch the information sharing mode between symmetric and asymmetric. We take supply contract with call options (SCCO) as an example to examine how the dynamic information sharing mechanism affects the performance of players in the supply chain and find some distinctive conclusions compared with previous studies. We find the static information sharing mechanism is a special case of the dynamic information sharing mechanism. With the further information sharing, the profits of the supply chain players do not necessarily rise in the upstream and downstream transaction. That is, complete information sharing in intelligent manufacturing may not be the best choice for decision makers even with the technical support of information sharing. Moreover, we find the SAF and also the supply chain can benefit more from the dynamic information sharing mechanism compared with the static information sharing mode.