Abstract
We study the value of information sharing in a two-stage supply chain with a single manufacturer and a single retailer in an infinite time horizon, where the manufacturer has finite production capacity and the retailer faces independent demand. The manufacturer receives demand information even during periods of time in which the retailer does not order. Allowing for time-varying cost functions, our objective is to characterize the impact of information sharing on the manufacturer's cost and service level. We develop a new approach to characterize the induced Markov chains under cyclic order-up-to policy and provide a simple proof for the optimality of cyclic order-up-to policy for the manufacturer under the average cost criterion. Using extensive computational analysis, we quantify the impact of information sharing on the manufacturer's performance in an infinite time horizon under both i.i.d. demand and independent but nonstationary demand.
Original language | English (US) |
---|---|
Pages (from-to) | 247-274 |
Number of pages | 28 |
Journal | Probability in the Engineering and Informational Sciences |
Volume | 18 |
Issue number | 2 |
DOIs | |
State | Published - 2004 |
All Science Journal Classification (ASJC) codes
- Statistics and Probability
- Statistics, Probability and Uncertainty
- Management Science and Operations Research
- Industrial and Manufacturing Engineering