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Production Control Policies in Supply Chains with Selective-Information Sharing

Author

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  • Boray Huang

    (Department of Industrial Engineering and Management Sciences, Northwestern University, 2145 Sheridan Road, Evanston, Illinois 60208)

  • Seyed M. R. Iravani

    (Department of Industrial Engineering and Management Sciences, Northwestern University, 2145 Sheridan Road, Evanston, Illinois 60208)

Abstract

We consider a supply chain consisting of one manufacturer (capacitated supplier) and two retailers. We characterize the manufacturer’s optimal production policy under selective-information sharing, in which the manufacturer receives demand and inventory information from only one of the two retailers. We show that the manufacturer’s optimal production policy is a state-dependent base-stock policy and that the base-stock levels have a monotonic structure. We also perform an extensive numerical study to examine how system factors affect the benefit of information sharing and the relative values of information from each retailer. In addition, we identify cases where the cost saving due to receiving information from only one retailer captures most of the saving that can be obtained when the information is received from both retailers. Finally, we investigate the cost effectiveness of echelon-stock policies in systems with full-information sharing and introduce the “information pooling effect” as well as economies of scale with respect to information sharing.

Suggested Citation

  • Boray Huang & Seyed M. R. Iravani, 2005. "Production Control Policies in Supply Chains with Selective-Information Sharing," Operations Research, INFORMS, vol. 53(4), pages 662-674, August.
    • Handle: RePEc:inm:oropre:v:53:y:2005:i:4:p:662-674
    DOI: 10.1287/opre.1040.0203
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    References listed on IDEAS

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    1. A. V. Thomas & Biswajit Mahanty, 2021. "Dynamic assessment of control system designs of information shared supply chain network experiencing supplier disruption," Operational Research, Springer, vol. 21(1), pages 425-451, March.
    2. Hyesung Seok & Shimon Y. Nof, 2018. "Intelligent information sharing among manufacturers in supply networks: supplier selection case," Journal of Intelligent Manufacturing, Springer, vol. 29(5), pages 1097-1113, June.
    3. Dhahri, Akrem & Gharbi, Ali & Ouhimmou, Mustapha, 2022. "Integrated production-delivery control policy for an unreliable manufacturing system and multiple retailers," International Journal of Production Economics, Elsevier, vol. 245(C).
    4. Jaber, Mohamad Y. & Bonney, Maurice & Guiffrida, Alfred L., 2010. "Coordinating a three-level supply chain with learning-based continuous improvement," International Journal of Production Economics, Elsevier, vol. 127(1), pages 27-38, September.
    5. Sina Ansari & Seyed M. R. Iravani & Qifeng Shao, 2019. "Optimal control policies in service systems with limited information on the downstream stage," Naval Research Logistics (NRL), John Wiley & Sons, vol. 66(5), pages 367-392, August.
    6. Kovtun, Vladimir & Giloni, Avi & Hurvich, Clifford, 2019. "The value of sharing disaggregated information in supply chains," European Journal of Operational Research, Elsevier, vol. 277(2), pages 469-478.
    7. 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.
    8. Wang, Yi & Zhang, Sheng Hao, 2021. "Optimal production and inventory rationing policies with selective-information sharing and two demand classes," European Journal of Operational Research, Elsevier, vol. 288(2), pages 394-407.
    9. Dominguez, Roberto & Cannella, Salvatore & Barbosa-Póvoa, Ana P. & Framinan, Jose M., 2018. "OVAP: A strategy to implement partial information sharing among supply chain retailers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 110(C), pages 122-136.
    10. Seyed M.R. Iravani & Tieming Liu & K.L. Luangkesorn & David Simchi‐Levi, 2007. "A produce‐to‐stock system with advance demand information and secondary customers," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(3), pages 331-345, April.
    11. Dominguez, Roberto & Cannella, Salvatore & Barbosa-Póvoa, Ana P. & Framinan, Jose M., 2018. "Information sharing in supply chains with heterogeneous retailers," Omega, Elsevier, vol. 79(C), pages 116-132.

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