Abstract: Inventory management is a critical part of the supply chain operation, and holding inventory is generally regarded as a passive choice of retailer in distribution channel. In fact, inventory may also be treated strategically as a means by the retailer to respond to manufacturer’s dynamic pricing. At the same time, the above behaviors of inventory and dynamic pricing are often influenced by the asymmetry of demand information.

Key words: supply chain; asymmetric information; strategic inventory; information disclosure; contract selection