Value of Information in a Capacitated Supply Chain

The aim of this study is to understand the effect of end item demand variability, production flexibility, inventory characteristics, the number of retailers, and the impact of information sharing between channel members in a capacitated supply chain. Discrete event simulation is carried out to determine the impact of the above mentioned factors in a supply chain under different information sharing strategies. The simulation allows us to capturing the dynamic and stochastic complexity of the supply chain system. A two‐level supply chain with one supplier having a capacity constraint and N identical retailers experiencing stationary and stochastic demand was built using a General Purpose Simulation Software. The optimum value of decision variables for various information scenarios is determined by multiple simulation runs and the response surface methodology technique.