RESEARCH ON VALUE OF INFORMATION SHARING IN ONE SUPPLIER-MULTIPLE RETAILER SUPPLY CHAIN

Prior research has generally focused on models involving a single or multiple retailers with independent demands. The value of demand information sharing is analyzed in a two-level supply chain involving one supplier-multiple retailer model in which retailer demands may be correlated. Each member in the supply chain forecasts its demand using an AR (1) demand process. Two conditions of the information sharing are considered (1) Without the information sharing, the retailers only communicate their orders to the supplier. (2) With the information sharing, retailers communicate their orders and forecasting models to the supplier. Analyses showthat the reductions of supplier‘s average inventory and average costs are substantial with the information sharing. However, the retailers donot get direct benefit from the information sharing. The retailers may ask the supplier to reduce the replenishment leadtime, so that the retailers will obtain substantial cost savings and inventory reduction. Both partners may obtain benefits when information sharing and leadtime reduction are implemented together.