Abstract: Collaboration mechanism between producer and suplier is studied under asymmetric information.Necessity of coordination mechanism is analyzed by comparing supply chain decision under asymmetric information with supply chain decision under symmetric information.Then an incentive function based on penalty cost and bonus is introduced and a coordination mechanism is set up by the combined use of order quantity,bonus and penalty cost type of instrument.Focus is on the study that the supply chain performance under asymmetric information is optimized through the producer's adjusting penalty cost and bonus with the determined order quantity.Simulation calculation is done and simulation results under different information backgrounds are compared at last.

Key words: asymmetric information, penalty cost, bonus, supply chain collaboration, collaboration mechanism