The Impact of Information Sharing and Advance Order Information on a Supply Chain with Balanced Ordering

The Impact of Information Sharing and Advance Order Information on a Supply Chain with Balanced Ordering

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Article ID: iaor201113080
Volume: 20
Issue: 2
Start Page Number: 253
End Page Number: 267
Publication Date: Mar 2011
Journal: Production and Operations Management
Authors: ,
Keywords: game theory, simulation: applications, optimization, stochastic processes, information
Abstract:

This paper considers a supply chain with one supplier and multiple retailers that face exogenous heterogeneous end-customer demands, where all parties utilize base-stock policies. Each retailer is restricted to order once in every order cycle and their orders are replenished in a balanced manner within the cycle. Our study investigates the impact of information sharing and advance order information (AOI) on the supply chain. We find that the supplier benefits from the two mechanisms via two important factors, the information about observed end-customer demands and the decision on re-establishing the replenishment sequence. We derive the supplier's optimal sequence for stochastically comparable end-customer demands with AOI and propose a sequencing rule for the setting with information sharing. Our numerical study examines the cost impacts of two proposed mechanisms on the entire supply chain.

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