Advanced Search
MyIDEAS: Login

Information Flows in Capacitated Supply Chains with Fixed Ordering Costs

Contents:

Author Info

  • Srinagesh Gavirneni

    ()
    (8804 Rattlebush Cove, Austin, Texas 78750)

Registered author(s):

    Abstract

    Many organizations have only recently recognized that sharing information with other members in their supply chain can lead to signficant reduction in the total costs.Usually these information flows are incorporated into existing operating policies at the various parties.In this paper we argue that, in some cases, it may be necessary to change the way the supply chain is managed to make complete use of the information flows. We support this argument by analyzing a supply chain containing a capacitated supplier and a retailer facing i.i.d. demands. In addition there are fixed ordering costs between the retailer and the supplier.In this setting, we consider two models: (1) the retailer is using the optimal (s,S) policy and providing the supplier information about her inventory levels; and (2) the retailer, still sharing information on her inventory levels, orders in a period only if by the previous period the cumulative end-customer demand since she last ordered was greater than \delta . Thus, in Model 1, information sharing is used to supplement existing policies; while, in Model 2, we have redefined operating policies to make better use of the information flows. We will show, via a detailed computational study, that the total supply chain costs of Model 2 are 10.4% lower, on the average, than that of Model 1. We noticed that this reduction in costs is higher at higher capacities, higher supplier penalty costs, lower retailer penalty costs, moderate values of set-up cost, and at lower end-customer demand variances.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://dx.doi.org/10.1287/mnsc.48.5.644.7806
    Download Restriction: no

    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 48 (2002)
    Issue (Month): 5 (May)
    Pages: 644-651

    as in new window
    Handle: RePEc:inm:ormnsc:v:48:y:2002:i:5:p:644-651

    Contact details of provider:
    Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Email:
    Web page: http://www.informs.org/
    More information through EDIRC

    Related research

    Keywords: supply chain management; information sharing; inventory control;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Hsu, Chaug-Ing & Li, Hui-Chieh, 2011. "Reliability evaluation and adjustment of supply chain network design with demand fluctuations," International Journal of Production Economics, Elsevier, vol. 132(1), pages 131-145, July.
    2. Yoon, Sang Won & Nof, Shimon Y., 2011. "Affiliation/dissociation decision models in demand and capacity sharing collaborative network," International Journal of Production Economics, Elsevier, vol. 130(2), pages 135-143, April.
    3. Sari, Kazim, 2008. "On the benefits of CPFR and VMI: A comparative simulation study," International Journal of Production Economics, Elsevier, vol. 113(2), pages 575-586, June.
    4. Fawcett, Stanley E. & Magnan, Gregory M. & McCarter, Matthew W., 2005. "Benchmarking Information Integration in Supply Chain Management: A Multi-channel Approach," Working Papers 05-0117, University of Illinois at Urbana-Champaign, College of Business.
    5. Kwak, Jin Kyung & Gavirneni, Srinagesh, 2011. "Retailer policy, uncertainty reduction, and supply chain performance," International Journal of Production Economics, Elsevier, vol. 132(2), pages 271-278, August.
    6. Mukhopadhyay, Samar K. & Yao, Dong-Qing & Yue, Xiaohang, 2008. "Information sharing of value-adding retailer in a mixed channel hi-tech supply chain," Journal of Business Research, Elsevier, vol. 61(9), pages 950-958, September.
    7. Byrne, P.J. & Heavey, Cathal, 2006. "The impact of information sharing and forecasting in capacitated industrial supply chains: A case study," International Journal of Production Economics, Elsevier, vol. 103(1), pages 420-437, September.
    8. Moghaddam, Mohsen & Nof, Shimon Y., 2014. "Combined demand and capacity sharing with best matching decisions in enterprise collaboration," International Journal of Production Economics, Elsevier, vol. 148(C), pages 93-109.
    9. Caridi, Maria & Crippa, Luca & Perego, Alessandro & Sianesi, Andrea & Tumino, Angela, 2010. "Do virtuality and complexity affect supply chain visibility?," International Journal of Production Economics, Elsevier, vol. 127(2), pages 372-383, October.
    10. Kurata, Hisashi & Yue, Xiaohang, 2008. "Trade promotion mode choice and information sharing in fashion retail supply chains," International Journal of Production Economics, Elsevier, vol. 114(2), pages 507-519, August.
    11. Chao, Gary H., 2013. "Production and availability policies through the Markov Decision Process and myopic methods for contractual and selective orders," European Journal of Operational Research, Elsevier, vol. 225(3), pages 383-392.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:48:y:2002:i:5:p:644-651. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.