Inventory Level and Lead Time Negotiation for Dynamic Supply Chain Coordination under Information Asymmetry

In modern supply chains, coordination between partners is frequently hindered by bilateral information asymmetry, particularly regarding lead times and inventory levels. To address these challenges, this study introduces a dynamic negotiation mechanism that iteratively aligns vendor and buyer decisions on these key operational variables. By focusing on lead time and inventory levels as primary negotiation levers, the proposed framework seeks to mitigate inefficiencies arising from withheld or distorted information. Using computational simulations, we assess the effects of this dynamic negotiation on supply chain performance, including cost efficiency, and overall system stability. Our findings suggest that the negotiation-based model promotes more transparent information exchange, resulting in mutually beneficial lead time agreements and improved inventory allocation, particularly when comparing strategic alternatives like offshoring and reshoring. This research contributes to the literature on supply chain coordination by demonstrating how a lead time-and inventory-focused negotiation mechanism can lessen the negative impacts of information asymmetry. In doing so, it offers practical insights into designing more resilient and adaptive supply chain strategies in dynamic and competitive environments.