The Effect of Partial Information Sharing in a Two-Level Supply Chain
AbstractIn many supply chains, the variance of orders may be considerably larger than that of sales, and this distortion tends to increase as one moves up a supply chain, this is known as "Bullwhip Effect". The Bullwhip phenomenon has recognized in many diverse markets. Procter & Gamble found that the diaper orders issued by the distributors have a degree of variability that cannot be explained by consumer demand fluctuations (Lee, Padamanabhan and Wang 1997a). Lee, Padamanabhan and Wang (1997a, b) developed a framework for explaining this phenomenon. Lee, So, and Tang (2000) showed that, within the context of a two-level supply chain consisting of single manufacturer and single retailer with AR(1) end demand, the manufacturer would benefit when the retailer shared its demand information. This paper considers the eRect of partial information sharing, within the framework of Lee, So and Tang, in one manufacturer and n retailers model, focusing on the variance of the manufacturer's "demand" (the retailers' order quantity).
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Bibliographic InfoPaper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 04-02.
Length: 18 pages
Date of creation: Feb 2004
Date of revision:
Supply Chain Management; Information Sharing; Inventory;
Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- M11 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Production Management
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- Hau L. Lee & V. Padmanabhan & Seungjin Whang, 1997. "Information Distortion in a Supply Chain: The Bullwhip Effect," Management Science, INFORMS, INFORMS, vol. 43(4), pages 546-558, April.
- Hau L. Lee & Kut C. So & Christopher S. Tang, 2000. "The Value of Information Sharing in a Two-Level Supply Chain," Management Science, INFORMS, INFORMS, vol. 46(5), pages 626-643, May.
- Disney, S. M. & Towill, D. R., 2003. "The effect of vendor managed inventory (VMI) dynamics on the Bullwhip Effect in supply chains," International Journal of Production Economics, Elsevier, Elsevier, vol. 85(2), pages 199-215, August.
- Raghunathan, Srinivasan, 2003. "Impact of demand correlation on the value of and incentives for information sharing in a supply chain," European Journal of Operational Research, Elsevier, Elsevier, vol. 146(3), pages 634-649, May.
- Stefansson, Gunnar, 2002. "Business-to-business data sharing: A source for integration of supply chains," International Journal of Production Economics, Elsevier, Elsevier, vol. 75(1-2), pages 135-146, January.
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