Information sharing in a multi-echelon inventory system

Abstract

The influence of different information sharing scenarios in a single supplier-single retailer supply chain is analyzed. The five information sharing scenarios are centralized information sharing, full information sharing, supplier-dominated information sharing, retailer-dominated information sharing, and noninformation sharing. Iterative procedures are developed to obtain the inventory policies and the system costs at equilibrium points. Numerical examples show that the cost of a centralized inventory system is about 20%–40% lower than that of a decentralized system with non-information sharing. Furthermore, a higher information sharing level does not always lead to a lower system cost in a decentralized supply chain due to inventory competition.