Economic analysis of demand uncertainty and delayed information sharing in a third-party managed supply chain

Snehamay Banerjee, Damodar Y. Golhar

Research output: Contribution to journalArticlepeer-review

6 Scopus citations

Abstract

Designers and retailers in consumer products industry are faced with high demand volatility and potential loss of profit from design piracy. Many retailers rely on third-party supply chain managers (SCMs) to manage global supply chains. A SCM starts raw materials procurement and production process based on expected demand and takes financial risks associated with demand uncertainty. But a retailer often delays sharing product design information with SCM forcing it to expedite production and distribution processes incurring additional financial penalties. To analyse economic impact of delayed information sharing under uncertain demand, we develop a mathematical model. Our model indicates that higher demand volatility lessens the effect of penalty associated with delayed information sharing for retailers. The model also shows that for a given demand volatility, per-unit premium increases asymptotically for a retailer compared to marginal production cost increase for SCM. Such findings are not intuitive for SCMs or retailers.

Original languageEnglish (US)
Pages (from-to)1107-1115
Number of pages9
JournalProduction Planning and Control
Volume28
Issue number14
DOIs
StatePublished - Oct 26 2017

All Science Journal Classification (ASJC) codes

  • Computer Science Applications
  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

Keywords

  • Delayed information sharing
  • demand uncertainty
  • economic analysis
  • third-party managed supply chain

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