Production control policies in supply chains with selective-information sharing

Boray Huang*, Seyed M.R. Iravani

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

28 Scopus citations

Abstract

We consider a supply chain consisting of one manufacturer (capacitated supplier) and two retailers. We characterize the manufacturer's optimal production policy under selective-information sharing, in which the manufacturer receives demand and inventory information from only one of the two retailers. We show that the manufacturer's optimal production policy is a state-dependent base-stock policy and that the base-stock levels have a monotonic structure. We also perform an extensive numerical study to examine how system factors affect the benefit of information sharing and the relative values of information from each retailer. In addition, we identify cases where the cost saving due to receiving information from only one retailer captures most of the saving that can be obtained when the information is received from both retailers. Finally, we investigate the cost effectiveness of echelon-stock policies in systems with full-information sharing and introduce the "information pooling effect" as well as economies of scale with respect to information sharing.

Original languageEnglish (US)
Pages (from-to)662-674
Number of pages13
JournalOperations Research
Volume53
Issue number4
DOIs
StatePublished - Jul 2005

Keywords

  • Dynamic programming: applications
  • Production/scheduling: applications

ASJC Scopus subject areas

  • Computer Science Applications
  • Management Science and Operations Research

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