Title: Utility of the inventory information sharing in a supply chain

Authors: Hiroshi Ohta, Rie Ikena, M. Abdur Rahim

Addresses: Faculty of Business Administration and Information, Setsunan University, Neyagawa, Osaka 572-8508, Japan. ' Department of Industrial Engineering, Graduate School of Engineering, Osaka Prefecture University, Sakai, Osaka 599-8531, Japan. ' Faculty of Business Administration, University of New Brunswick, Fredericton, NB, E3B 5A3, Canada

Abstract: Supply chain information sharing has been known to reduce a firm|s operating costs. Cost-saving benefits from sharing either upstream or downstream information among supply chain members has been well recognised and well studied in the literature in recent years. Information sharing on inventory policies is also important to both buyers and suppliers. In this study, we utilise a supply chain system consisting of a supplier, Buyer 1 and Buyer 2, and analyse the effect of the reordering point system for the supplier and two buyers when they cooperatively determine their optimal order quantities. This paper provides inventory models for a three-echelon supply chain such that the expected cost function is minimised. The research considers both; the case where inventory information is being shared among the three supply chain partners (supplier, Buyer 1 and Buyer 2) and the case where inventory information is only observed from the downstream partner. Through a numerical example, we compare the performance of both systems and provide a set of observations regarding the utility of inventory information sharing among partners from an economic viewpoint.

Keywords: supply chain management; SCM; supply chain partners; information sharing; echelon stock; reordering point policy; inventory policies; inventory modelling.

DOI: 10.1504/IJISM.2009.029360

International Journal of Integrated Supply Management, 2009 Vol.5 No.2, pp.173 - 193

Published online: 22 Nov 2009 *

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