Information Exchange in the Supply Chain.
Abstract
In recent years, manufacturers have taken initiatives to integrate information within their supply chains in order to provide quick response to customer needs. In this paper, we study the influence of sharing supplier capacity information (such as available-to-promise (ATP) on the performance of a supply chain. We consider a supply chain in which a manufacturer orders raw materials from two alternative suppliers differing in cost and capacity. We first derive the optimal inventory policy for the manufacturer under stochastic demand. Subsequently, using simulation, we compare different information sharing scenarios. Among other results our study shows that, while information sharing is beneficial to overall supply chain performance, in can be detrimental to individual entities in the supply chain. We find at when supplier adoption costs of the information system are negligible, the more expensive supplier makes less profits under information sharing. However, it is forced to share information. When adoption costs are substantial, our results indicate that it is better for the manufacturer to have information links with fewer suppliers (a subset of potential suppliers).
Document Details
- Document Type
- Technical Report
- Publication Date
- Oct 01, 1995
- Accession Number
- ADA310941
Entities
People
- Jayashankar M. Swaminathan
- Norman M. Sadeh
- Stephen F. Smith
Organizations
- Carnegie Mellon University